Bangladesh: Road Maintenance and Improvement Project

Performance
Evaluation Report
Bangladesh: Road Maintenance

and Improvement Project
Independent
Evaluation
Performance Evaluation Report

December 2014
Bangladesh: Road Maintenance and Improvement

Project
This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.
Reference Number: PPE BAN 2014-16

Project Number: 33243
Loan Numbers: 1789/1790
Independent Evaluation: PE-775
NOTES
(i)
(ii)
In this report, $ refers to US dollars.

For an explanation of rating descriptions used in ADB evaluation
reports, see ADB. 2006. Guidelines for Preparing Performance
Evaluation Reports for Public Sector Operations. Manila.
Director General
Director
V. Thomas, Independent Evaluation Department (IED)

Bob Finlayson, Independent Evaluation Division 2, IED
Team leader
Team members
E. Kwon, Principal Evaluation Specialist, IED

F. De Guzman, Senior Evaluation Officer, IED
M. Fortu, Senior Evaluation Assistant, IED
The guidelines formally adopted by the Independent Evaluation Department on

avoiding conflict of interest in its independent evaluations were observed in the
preparation of this report. To the knowledge of the management of the Independent
Evaluation Department, there were no conflicts of interest of the persons preparing,
reviewing, or approving this report.
In preparing any evaluation report, or by making any designation of or reference to a
particular territory or geographic area in this document, the Independent Evaluation
Department does not intend to make any judgment as to the legal or other status of
any territory or area.
Abbreviations
AADT
ADB
ADF
ADP
CIC
CPAR
DMF
EIRR
FGD
FIRR
FY
GDP
ha
HDM
IED
IEM
IRI
KII
km
LARP
LGED
MVO
OCR
PCR
PPER
PPP
RHD
RMC
SDR
VOC
average annual daily traffic

Asian Development Bank
Asian Development Fund
annual development plan
corridor improvement component
Chittagong Port access road
design and monitoring framework
economic internal rate of return
focus group discussion
financial internal rate of return
fiscal year
gross domestic product
hectare
highway development and management
Independent Evaluation Department
independent evaluation mission
international roughness index
key informant interview
kilometer
land acquisition and resettlement plan
local government engineering department
Motor Vehicles Ordinance
ordinary capital resources
project completion report
project performance evaluation report
publicprivate partnership
Roads and Highways Department
road maintenance component
special drawing rights
vehicle operating cost
Currency Equivalents
Currency Unit taka (Tk)
P1.00 =
$1.00 =
At Appraisal
(October 2000)
$0.0186
Tk 53.75
At Program Completion
(April 2009)
$0.0140
Tk 71.23
At Evaluation
(February 2013)
$0.0127
Tk 78.35
Contents
Acknowledgement
Basic Data
Executive Summary
v
vii
ix
Chapter 1: Introduction
A.
Project Scope
B.
Evaluation Purpose and Process
1
1
1
Chapter 2: Design and Implementation

A.
Background
B.
Rationale
C.
Outcomes and Outputs
D.
Project Risks and Mitigation Arrangements
E.
Cost, Financing, and Executing Arrangements
F.
Project Outputs
2
2
3
4
5
6
8
Chapter 3: Performance Assessment

A.
Overall Assessment
B.
Relevance
C.
Effectiveness
D.
Efficiency
E.
Sustainability
F.
Development Impacts
G.
ADB Performance
H.
Borrower and Executing Agency Performance
11
11
11
13
14
15
16
18
18
Chapter 4: Issues, Lessons, and Follow-Up Actions
19
APPENDIXES
1.
Design Summary
2.
Implementation
3.
Covenants
4.
Policies
5.
Economic Reevaluation
6.
Financial Reevaluation
7.
Socioeconomic Reevaluation
22
24
25
29
32
41
44
Acknowledgement
The guidelines formally adopted by the Independent Evaluation Department (IED) on
avoiding conflict of interest in its independent evaluation were observed in the
preparation of this report. Mr. Joselito Supangco, Mr. Ahmed Faruque, and Mr. Nazrul
Islam assisted the IED PPER team with field evaluation, project-related documents, data
and information, and the socioeconomic field survey. To the knowledge of the
management of IED, there were no conflicts of interest of the persons preparing,
reviewing, or approving this report.
Basic Data
Bangladesh: Road Maintenance and Improvement Project
As per ADB
Key Project Data
Loan Documents
($ million)
1789 and 1790
Total project cost
Foreign exchange cost
Local currency cost
ADB loan amount utilized
ADB loan amount cancelled
160.20
75.60
84.60
Actual
1789 and 1790
117.77
48.13
69.64
67.60
37.27
Key Dates
Fact-finding
Appraisal
Loan negotiations
Board approval
Loan agreement
Loan effectiveness
Number of extensions
First disbursement
Project completion
Loan closing
Months (effectiveness to
completion)
18 March 2001
Mar 2004
30 Jun 2005
57
Mar 2004
30 Jun 2005
57
24 Feb15 Mar 2000

922 June 2000
1618 October 2000
29 November 2000
18 December 2000
10 September 2001
3
2
20 Dec 2001
10 Sep 2001
Jun 2007
Sep 2008
15 Apr 2009
18 Jun 2008
99
81
Borrower:
Bangladesh
Executing Agency: Roads and Highways Department
Mission Data
Type of Mission
Fact-finding
Appraisal
Inception
Special loan administration
Road sector implementation issues
Environmental compliance review
Special project administration
Review
Project completion
Independent evaluation
ADB = Asian Development Bank.
No. of Missions
1
1
1
1
1
1
1
12
1
1
No. of Person-Days
100
140
30
64
9
4
2
230
6
12
Executive Summary
This project performance evaluation report (PPER) evaluates the Road
Maintenance and Improvement Project in the Peoples Republic of Bangladesh to assess
its performance and highlight its lessons.
The Project
The project was developed in response to the Government of Bangladeshs
focus on the countrys five major road corridors. Developing and maintaining an
effective road network was a key theme in Bangladeshs Fifth Five-Year Plan, 1997
2002. Expanding the capacity of the DhakaChittagong Corridor was necessary to
establish efficient transport between the countrys capital and its main port. Improving
the road network was expected to lead to significant economic growth and poverty
reduction in the southeast region. The project was designed to develop physical
infrastructure and introduce specific policy and institutional reforms in the road
subsector.
Project objectives were to (i) improve transport efficiency on existing roads
nationwide by strengthening the governance of road maintenance and conducting
priority periodic maintenance works; (ii) improve transport efficiency on the strategic
Southeast Road Corridor by upgrading road conditions and increasing capacity; and (iii)
increase private sector participation in the delivery of road infrastructure by
establishing an enabling policy and legal environment and by implementing a toll
road demonstration project.
The project was comprised of a corridor improvement component (CIC) and a
road maintenance component (RMC). Each component had investment and policy
outputs. For the CIC, the outputs consisted of constructing of 111 kilometer (km)
sections of road along the Southeast Road Corridor, and establishing a policy and legal
framework for toll-funded private sector operation and maintenance, and a legal
framework for controlled access highways. For the RMC, the outputs consisted of
adopting and implementing a policy framework for road maintenance, and periodically
maintaining an estimated 250400 km of roads for each of the 3 years from fiscal year
(FY) 2002/03 to FY2004/05.
The Asian Development Bank (ADB) approved the project in November 2000. Its
total cost was estimated at $160.2 million. ADB approved total funding of $94 million
equivalent, comprised of $72 million equivalent from the Asian Development Fund
(ADF) (Loan 1789) and $22 million from ordinary capital resources (OCR) (Loan 1790).
The two loans became effective in September 2001, with a 6-month delay from the
original target date for loan effectiveness. The project was completed in April 2009,
about four years after the targeted completion date of June 2005. The actual project
cost was $117.77 million, which was 74% of the original estimated cost. ADB had to
cancel loan amounts totaling $37.27 million, representing 24% of the loan approved,
which the PPER reported were derived mainly from construction cost savings.
The CIC components achievements were as follows: (i) a total of 113.25 km of
road was constructed on the Southeast Road Corridor, exceeding the target of 111 km,

and (ii) a legal framework was provided and environment outputs were enabled to
support private sector participation in roads. The RMC component achieved the
following: (i) sealing and overlay of a total of 369.5 km of road, which was about 30%
of the original target; and (ii) a policy framework for road maintenance, which was
partially achieved.
The 4-year overrun was due to: (i) delays in the contract award for the RMC
subprojects due to changes in procurement arrangements envisaged at appraisal, (ii)
delays in government approval for the interim operation and maintenance contract of
the Chittagong Port access road (CPAR), (iii) slow progress in implementing the
contract for the feasibility study and detailed design for the DhakaChittagong
Highway, and (iv) delays in the approval of the feasibility study by the Government
Purchase Committee. The executing agency was the Road and Highway Department
(RHD) of the Ministry of Communications. Procurement was implemented through
eleven packages, comprising nine packages for civil works and one package each for
construction supervision and the feasibility study.
Assessment
The projects objective was to resolve problems of inadequate road
infrastructure and road maintenance. These issues were resulting in chronic congestion
(i.e., traffic growth outstripping capacity on strategic corridors) that was putting strains
on many road sections, shortening their economic life. The poor condition of the road
network made road transport services expensive and unreliable. These, in turn, reduced
the mobility of labor and goods and services, constraining economic development
potential and impeding poverty reduction efforts. As a result, there was an urgent need
to upgrade the existing road network and expand the capacity of the Southeast Road
Corridor, the countrys main highway, focusing on the DhakaChittagong Corridor.
This corridor links Dhaka to the countrys main port, Chittagong. The rehabilitation
was expected to spur economic growth and employment opportunities in Bangladesh.
The project was expected to improve the transport network connecting urban
and rural areas in order to stimulate nonfarm activities and attract private investment
in the rural areas. Setting up effective maintenance systems and promoting private
sector participation in roads were vital to supporting reforms to improve transport
system efficiency by increasing the sustainability of investments.
ADBs support for transport infrastructure in Bangladesh focused on upgrading
road infrastructure and improving the enabling environment for private sector
participation in the road subsector. ADBs assistance was designed to reduce the road
maintenance backlog by establishing a special road maintenance fund. These initiatives
were designed to improve road conditions and provide sustainable funding sources to
meet periodic road maintenance requirements.
Transport infrastructure in the project areas was generally improved in the CIC
through the completion of civil works and the passage of key policy measures,
especially those pertaining to financing road maintenance. The actual road length for
which periodic maintenance works were completed under the RMC fell short of what
was envisaged at appraisal. The likelihood that this shortfall will be addressed has
increased following the recent approval of the Road Fund Board Act. This legislation
will provide the legal basis for delivering a stream of public sectorsourced revenues to
fund road maintenance. Despite these reforms, there is no evidence that this funding
Executive Summary
will be forthcoming, or that it will be sufficient to meet asset management
requirements.
The project is rated less than successful. In terms of the specific evaluation
criteria, the project was rated relevant, less than effective, efficient, and less than likely
sustainable:
(i)
Relevance: relevant. The projects objectives and design were closely

aligned with the governments development strategies and ADBs
country strategy in Bangladesh. It had strong economic development
and poverty reduction elements. The project design for the CIC
provided the necessary capacity for the sections of the Dhaka
Chittagong Highway that were subject to high traffic volumes. The
project included the construction of bypasses, the piloting of private
sector maintenance of roads, and the policy formulation and
implementation needed to address high-priority road maintenance
activities and their funding. Offsetting this result, only 30% of the RMC
maintenance component was implemented, and 24% of the total loan
amount was cancelled, raising questions about the relevance of the
original design. The project design did not adequately reflect the
differences in timelines for constructing infrastructure, relative to
developing new institutional capacity.
(ii)
Effectiveness: less than effective. It is difficult to evaluate the

projects effectiveness due to the absence of any baseline data
that could be used to determine the level of benefits accruing to
beneficiaries. The CIC achieved its intended outputsroad
construction, reforms to the policy and legal framework for tollfunded private sector operation and maintenance, and the legal
framework for developing controlled access highways. In
comparison, the RMC outputs were only partially achieved, with
two of the five project components being fully achieved and three
partially achieved. The partially achieved components were: (i) the
road length covered for periodic maintenance was less than
forecast; (ii) the budget for periodic maintenance continued to be
combined with the annual road development budget, making it
difficult to confirm the availability of maintenance funds; and (iii)
sources of finance of the road fund are still not secured.
(iii)
Efficiency: efficient. The delayed implementation process undermined

the projects efficiency: the project had a time overrun of 108%, taking
eight years rather than the original estimate of four years to reach
completion. There are also concerns about lack of funding for
maintenance. Nevertheless, the re-estimated economic internal rates of
return at 17.1% and 17.4% for the CIC and RMC, respectively, confirm
the projects economic viability.
(iv)
Sustainability: less than likely sustainable. Project sustainability relies on

adequate maintenance practices and funding. The sections improved
under the CIC and RMC are receiving some maintenance from the RHD,
but it is unclear how sustainable this maintenance will be, given
uncertainties about road funding. On 25 June 2012, the government
enacted the Motor Vehicles Axle Load Control Regulations, which ban
xi
xii

overloaded vehicles from the countrys road network. Strict
enforcement of the regulations would strengthen the sustainability of
the project roads, but this effect has not yet been demonstrated by this
project. In July 2013 Parliament passed the Road Maintenance Fund
Board Bill, providing for the creation of a fund for proper maintenance,
repair, and renovation of roads under the RHD. Offsetting these
developments, the PPER noted that sources of the Road Fund Board
Act, approved in 2013, have yet to be secured, and that 70% of the
maintenance component under the loan was not implemented,
indicating that the government has limited commitment to
maintenance. There is no evidence that funding is being provided at a
level that reflects asset sustainability levels. This uncertainty undermines
the probability that the projects outputs under the RMC will be
adequately maintained over the projects economic lifetime.
(v)
Impact: Projected institutional reforms, such as sustainable

maintenance funding for roads, were not achieved. The projects
socioeconomic impacts include shortened travel time to nearby cities,
towns, and growth centers; diversified income sources as a result of
increased economic opportunities; expanded trade and businesses;
improved access to social services; and more social interactions within
as well as outside communities. Offsetting this result, the project did
not gather any baseline data that could be used to assess impacts, and
it is difficult to attribute the projects benefits to the countrys
economic growth at that time. Unrealistic economic benefit forecasts
presented in the RRP are unlikely to be realized. The views expressed by
the local population, representatives of local councils, and various
government agencies did not identify any major environmental or
resettlement problems.
Issues, Lessons, and Follow-up Actions

Time dimension of reform process. Implementing policy reforms entails a
complex and long-term process of change. The legislation and policy measures that
were enacted required fundamental changes to the roles of several concerned
institutions. These types of reforms can take longer than anticipated, adding
uncertainty to the realization of actual outputs and outcomes. The full extent of
reforms, especially to institutional arrangements, may extend well beyond the usual
administrative life of a project loan. Also, performance targets during the operating
period can entail time lags that require a longer time frame than the development
period of the loan to be fully measured.
Baseline data collection is a priority. At appraisal and during implementation,
greater attention should have been given to the design and monitoring framework,
especially in establishing measurable indicators and their baseline values, and target
values with a realistic time frame to achieve these goals. Higher priority should have
been given to ensure that baseline data were collected prior to project implementation,
and updated during project implementation and at completion. The absence of
baseline data has made this independent evaluation of the project difficult.
ADB should closely monitor the CPAR, especially the development of vehicle
parking facilities by the private sector and the periodic adjustment of tolls to cope with
the increased costs of toll road operations and maintenance. The government should
Executive Summary
carefully consider lessons from the implementation of this pilot publicprivate
partnership to ensure that future projects are not only attractive to the private sector,
but beneficial to users as well.
Project design and risk analysis. The mitigation measures identified in the RRP
to address project risks were largely unsuccessful, and the project was subject to long
time delays, problems with land acquisition and procurement, shortfalls in demand,
and insufficient funding for maintenance. Despite advance procurement actions,
enactment of legislation for maintenance, and establishment of controlled access
arrangements for the CPAR, the expected results were not achieved. In part, the
problem appears to be attributable to weaknesses in the project design, in which the
feasibility study and detailed design were not completed until 9 March 2008, seven
years after loan approval. A greater level of upfront efforts in project preparation,
particularly in the areas of preparing credible traffic forecasts and identifying road
alignments, could pay large dividends. Similarly, credible solutions can be developed
upfront before finalization of the loan to address perennial issues such as delays in land
acquisition and procurement.
Road Maintenance Fund. The adequacy of funding for the Road Maintenance
Fund is a critical risk for the CIC that needs to be monitored.
xiii
CHAPTER 1
Introduction
1.
This chapter describes the scope of the project, the purpose of this project
performance evaluation report (PPER), and the process taken to prepare it.
A.
Project Scope
2.
The Road Maintenance and Improvement Project was approved by the
Board of the Asian Development Bank (ADB) in November 2000 and was
developed in response to the Government of Bangladeshs focus on the development
of the countrys five major road corridors. Constructing and maintaining an effective
road network was a key theme in road infrastructure development in Bangladesh in
its Fifth Five-Year Plan, 19972002. Expanding the capacity of the DhakaChittagong
Corridor, which was one of the five corridors, was necessary to establish efficient
transport between the countrys capital and its main port. Improvement of the road
network under the project was expected to lead to significant economic growth
throughout the southeast region and contribute to poverty reduction. The project was
designed to introduce specific policy and institutional reforms in the road subsector to
support improvements in road maintenance, and enable a greater level of participation
by the private sector.
3.
The project was completed in April 2009, about four years after the targeted
completion date of June 2005. The project completion report (PCR) was prepared in
December 2009 and it rated the project successful. The project was rated highly
relevant, effective, efficient, and less likely to be sustainable.1
B.
Evaluation Purpose and Process
4.
The purpose of this evaluation is to prepare an independent PPER, which has
been scheduled for about 5 years after the projects completion. This interval provides
adequate time to assess progress in achieving the projects effectiveness, efficiency, and
sustainability objectives. The schedule provided sufficient time to assess the impact of
the improvements to the roads under the project. The timing of the preparation of the
PPER should enable key lessons to be identified for successful implementation of similar
road projects in the country. The independent evaluation mission (IEM) that was fielded
to prepare this PPER was conducted in December 2012. As part of the preparation of
the PPER, an independent socioeconomic team was fielded between October 2012 and
February 2013 to assess the projects socioeconomic impacts.
ADB. 2009. Project Completion Report: Bangladesh: Road Maintenance and Improvement Project (Loans
1789 and 1790). Manila.
The project
was designed
to introduce
specific policy
and
institutional
reforms to
support
improvements
in road
maintenance,
and enable a
greater level of
participation by
the private
sector
CHAPTER 2
Design and Implementation

5.
This chapter reviews the project background, rationale, outcomes and outputs,
and resource and financing assumptions underlying the project design; project risks
and mitigation arrangements identified in the loan documents; and the actual
implementation program. The chapter compares the projected performance of the
original design with its actual performance.
A.
Background
6.
Bangladeshs road network was in poor condition at the time of project
preparation. This poor condition was largely due to inadequate maintenance and
resulted in expensive and unreliable transport services, which, in turn, constrained
movements of labor, goods, and services. Increasing numbers of vehicles, inadequate
road safety measures, and weak discipline and enforcement of traffic regulations led to
a high level of road accidents. Maintenance activities suffered, since total spending on
periodic maintenance fell short of the required level for asset sustainability, and was
insufficient to address the maintenance backlog.
7.
Insufficient maintenance and rehabilitation of Bangladeshs road network
resulted in chronic congestion, with traffic growth outstripping capacity on strategic
corridors. In particular, the capacity of the Southeast Road Corridor from the countrys
capital (Dhaka) to its main port (Chittagong) needed expansion to promote economic
growth and employment opportunities. Also, there was a need to put in place a
transparent and effective maintenance system and enhance private sector participation
in road infrastructure. These conditions were considered critical impediments to
poverty reduction efforts.
8.
Against this background, the government sought to accelerate infrastructure
development by focusing on the countrys major road corridors. In 1999, the
government asked ADB to improve the Southeast Road Corridor between Dhaka and
Chittagong, which is the countrys most important highway. Expanding this corridors
capacity was considered vital to accommodate rapid growth in traffic and improve
transport efficiency between the countrys capital city and its main port. This corridor
serves a large proportion of the countrys population in both urban and rural areas.
9.
The government also asked for ADB assistance the following year, 2000, to help
reduce the road maintenance backlog and institutionalize a special road maintenance
fund. A third private sector component was added to the project as expanded private
sector participation was needed to improve economic efficiency and reduce the
required amount of public financing for road infrastructure. The project was based on
various feasibility studies and reports on the environment, land acquisition and
resettlement, and poverty reduction impacts. The proposed project design
underpinning the loan was formulated in consultation with the government and its
development partners.
B.
Rationale
10.
The project, through a combination of investment and policy elements, was
designed to expand road capacity and upgrade road maintenance to achieve
improvements in transport efficiency. By focusing on the countrys strategic highway, it
aimed to accelerate economic development and poverty reduction. A key project
priority was the development of a system for periodic road maintenance. Road
maintenance is essential to achieve transport efficiency. Easing the huge backlog on
road maintenance was preferable to further increasing the capacity of road
infrastructure. However, these objectives would have more chance of success if the
assistance provided a suitable policy and legal framework to encourage greater private
sector participation.
1.
Need for Road Capacity Expansion
11.
The demand for road transport increased rapidly in the 1990s, at an annual
rate of 8% for passengers and 7% for freight. Between 1989 and 1997, modal share for
roads rose from 57% to 75% for passenger traffic, and from 59% to 65% for freight.
Over the same period, the vehicle fleet grew at an annual rate of 8%. In 2006, road
transport accounted for 88% of passenger kilometers (km) and 80% of freight-ton km,
compared to 1998 levels of 72% and 65%, respectively. 2 Traffic growth on the major
corridors outstripped capacity, resulting in congestion and reduced transport efficiency.
Inefficient and unreliable road transport and a poorly developed road network limited
mobility of goods and services, thereby constraining economic development.
12.
The DhakaChittagong Corridor, which had the strategic sections with the
highest traffic levels and greatest importance to the economy, urgently needed to
expand capacity to respond to the countrys increasing demand for transport
infrastructure. The corridor served the majority of freight and passenger traffic. At
appraisal, the traffic flow was more than 10,000 vehicles per day, with a high
proportion of trucks and buses. The corridors capacity needed to be expanded to
accommodate the traffic growth of over 78% per annum that was occurring at that
time.
2.
Road Maintenance and Funding
13.
The road network administered by the Roads and Highways Department (RHD)
consisted of about 20,850 km of roads in 1999.3 A substantial amount of money was
being spent every year for repairs and maintenance of these roads. However, funding
for maintenance remained insufficient, resulting in many roads not reaching their
economic life. Unless periodic maintenance is undertaken regularly, roads will rapidly
deteriorate and rehabilitation expenses can become very high. Periodic maintenance
practices were inadequate due to a lack of strategic planning, financing, and execution.
14.
Adequacy of funding for road maintenance was a critical issue. 4 The
government financed road maintenance from the revenue budget and the annual
Bangladesh Sixth Five-Year Plan FY20112015Accelerating Growth and Reducing Poverty. Planning
Commission, Ministry of Planning Government of the Peoples Republic of Bangladesh. July 2011.
HDM Circle. Maintenance and Rehabilitation Needs Report of 20122013 for RHD Paved Roads. Roads and
Highways Department.
Road sector revenues were collected through (i) fuel taxes; (ii) customs, excise duties, and sales taxes on
vehicle acquisition, spare parts, and tires; (iii) registration and annual vehicle license fees and other fees
A key project
priority was the
development of
a system for
periodic road
maintenance

development plan (ADP). The RHD of the Ministry of Communications regularly used
project funding in the ADP to supplement its budget for periodic maintenance. Periodic
maintenance work financed from the revenue budget and ADP fell short of the amount
required to meet the sustainable level stated in the Annual Road Maintenance Plan
(ARMP) and reduce the maintenance backlog. As a result, the government was using
available funds to improve capacity by rehabilitating the existing road network, rather
than expanding the road network to meet increases in demand.
15.
The maintenance backlog was gradually increasing, as the available funds could
not meet the 1316% growth in demand. To reduce the backlog, the government
needed to access additional sources of external and domestic funding for maintenance.
In order to do so, the government needed to implement several measures, including
the following: (i) a policy commitment to prepare road maintenance and periodic
maintenance budgets using the Highway Development and Management (HDM-4)
model under the ARMP; (ii) transparent budgeting to enable monitoring of periodic
maintenance expenditure; (iii) setting the periodic maintenance budget at the level
required for asset sustainability; (iv) funding the periodic maintenance budget on a
permanent basis from domestic sources; and (v) adequately resourcing the
maintenance directorate. ADBs assistance to address the backlog was based on the
need for the government to improve road conditions and develop sustainable sources
of funding from the public and private sectors to finance the maintenance backlog and
meet periodic road maintenance requirements.
3.
Private Sector Participation Policy
16.
Private sector participation in the road sector was limited to supplying goods,
materials, equipment, and consulting services. Private contractors were engaged in toll
collection, and were only permitted to provide routine maintenance. Collected toll
revenues could not be used to maintain related road assets, or be set at levels that
generated an economic return on investment.
The projects
outcomes were
As a result, the private sector had not invested in roads, or participated in their
to: (i) improve 17.
operation. With persistent traffic growth on the strategic road corridors, toll roads
transport needed to be made more commercially attractive to private investors to encourage
efficiency on the them to invest in the sector. Other constraints were the lack of both a policy and legal
strategic framework to provide clarity and establish confidence among potential investors that
Southeast Road they would generate a return on their investment, and private sector experience
working in the road sector in Bangladesh. In 2005, the government approved a policy
Corridor; (ii) framework for publicprivate partnerships (PPPs).5 Private sector investment in roads
increase private offered opportunities to complement the governments meager resources for road
sector in road; investments.
and (iii) improve
C.
Outcomes and Outputs
transport
efficiency on 18.
The projects main objectives and outcomes were to: (i) improve transport
efficiency
on the strategic Southeast Road Corridor by upgrading road conditions and
existing roads
capacity; (ii) increase private sector participation in the delivery of road
nationwide increasing
infrastructure by establishing an enabling policy and legal environment and
implementing a toll road project; and (iii) improve transport efficiency on existing roads
related to drivers licenses and route permits percent; and (iv) tolls and charges on ferries and selected
bridges.
Prime Ministers Office, Government of the Peoples Republic of Bangladesh. 2004. Bangladesh: Private
Sector Infrastructure Guidelines. Dhaka.

nationwide by strengthening the governance of road maintenance and by
conducting prioritized sections for periodic maintenance works, targeting areas
with a high incidence of poverty. The project framework indicated that the expected
impacts were enhanced economic growth and reduced poverty in the project areas; the
expected outcome was improved transport efficiency.
19.
The project had two components: (i) the corridor improvement component
(CIC); (ii) and the road maintenance component (RMC). Each of these components had
investment and policy elements. The CIC was designed to improve sections of the
Southeast Road Corridor, establish the policy and legal framework for increased
private sector involvement in the road subsector, and implement a toll road
demonstration project for the Chittagong Port access road (CPAR). The RMC was
designed to address the policy, planning, implementation, and financing requirements
for establishing adequate maintenance of the RHD road network.
20.
The project had the following intended outputs. For the CIC, the outputs were
construction of an 111-km section of road along the Southeast Road Corridor, and a
legal framework and enabling environment for private sector participation in roads,
which included establishment of a policy and legal framework for toll-funded private
sector operation and maintenance, and setting up a legal framework for controlled
access highways.6 For the RMC, the outputs were the adoption and implementation of
a policy framework for road maintenance, and periodic maintenance of an estimated
250400 km for each of the 3 years from fiscal year (FY) 2002/03 to FY2004/05.
D.
Project Risks and Mitigation Arrangements
21.
The report and recommendation of the President (RRP) primarily focused on
risks associated with the CIC. The main risk identified in the RRP was the level of
sustainability of the benefit streams from the CIC investment due to inadequate
maintenance and truck overloading. The RRP indicated that this risk factor would be
addressed by incorporating a project component that would secure a government
budget for road maintenance and undertaking policy dialogue to improve axle-load
control. The RRP recognized there were risks that the maintenance policy framework
would not be implemented and funding for maintenance would not be secured. The
RRP noted that, based on previous experience, more direct means of cost recovery
needed to be devised, including toll collection and creation of funds reserved for road
maintenance. Traffic volumes were identified as a risk for the CIC if the government did
not include adequate provision for controlling access, or if new port developments led
to a significant shift in traffic levels and patterns. The former risk would be addressed
through the policy component of the RMC and by having a private concessionaire
operate and maintain the CPAR. The latter risk was addressed by a provision in the loan
agreement to strengthen controlled access arrangements under the Highways Act and
the Motor Vehicles Ordinance (MVO). The government had agreed to amend the MVO
within 18 months of loan effectiveness, to strengthen its provisions in enforcing
controlled access. The loan agreement provided for suspension of loan withdrawals if
legal provision for access control was removed.
22.
The RRP highlighted the need to pay careful attention to project formulation
and design, including acquiring the right-of-way, and providing sufficient resources for
6
The CIC comprised three parts: (i) overlay and widening of the Chandina, Comilla, and Feni bypasses
(52km); (ii) upgrading and widening of the FeniChittagong section, including construction of local
bypasses (47 km); and (iii) construction of the Chittagong Port access road, an access-controlled toll road
(12 km).
5
The CIC was to
improve the
Southeast Road
Corridor,
establish the
policy and legal
framework for
private sector
involvement in
road, and
implement the
tolled
Chittagong Port
access road
The RMC was to
adopt and
implement a
policy
framework for
road
maintenance,
and periodically
maintain about
250400 km for
each of the 3
years

feasibility studies and design. The approach to implementation must take account of
the capacity of road sector institutions and the private contracting industry. The RRP
highlighted the need to provide adequate attention to the social and environmental
aspects of road projects. The project was classified as environmental Category A due to
the need for a new alignment under a subcomponent of the CIC. No details were
provided in the RRP on social safeguards. The government prepared an environmental
impact study (EIA), which was approved by the Department of Environment in June
2000, following a public hearing at the project site. The principal adverse social impact
identified was the loss of land due to the need for land acquisition and resettlement
under the CIC. ADB-financed surveys sought to address these impacts in accordance
with the governments procedures and ADBs Policy on Involuntary Resettlement. At
appraisal, the government prepared a summary land acquisition and resettlement plan
(LARP). It was estimated that under the CIC component, about 58.6 hectares (ha) of
land would be required and a total of 8,229 people would be affected. The risk of
implementation delays was addressed by (i) completing detailed engineering prior to
appraisal, (ii) taking advance action for procurement, (iii) preparing the LARP and EIA
by consulting with stakeholders, and (iv) providing sufficient resources for supervision
consulting services.
E.
Cost, Financing, and Executing Arrangements

1.
Costs and Financing
23.
Initial project preparation was financed through a project preparatory technical
assistance project at a total cost to ADB of $250,000, equivalent to 0.2% of the
estimated project cost.7 At appraisal, the projects total cost was estimated at $160.2
million equivalent, of which the foreign exchange cost was $75.6 million, and the local
currency cost was $84.6 million equivalent. At completion, the projects actual cost was
$117.77 million equivalent, which was 27% lower than the appraisal estimates. Within
this total, the actual cost for the CIC was $68.61 million equivalent, compared to the
appraisal estimate of $100.83 million equivalent, an underspending of 31%. For the
RMC, the actual cost was $26.8 million equivalent, compared to the estimate of $36.0
million equivalent at appraisal, an underspending of 26%. Offsetting these results, land
costs increased from an estimate of $6.1 million to an actual cost of $9.6 million.
24.
ADB financed about 60% of estimated project costs, totaling $94.0 million
equivalent, of which $22.0 million was sourced from the ordinary capital resources and
$72.0 million equivalent was sourced from the Asian Development Fund (ADF).8 The
loan was denominated in a mix of US dollars and special drawing rights (SDR). As a
result of the contract cost savings and deferral of maintenance under the RMC, the
government requested four partial cancellations from the ADF loan, totaling 32% of
the original loan amount, which ADB approved.9
8
9
ADB. 1996. Technical Assistance to the Peoples Republic of Bangladesh for the Third Road Improvement
Project (TA 2678-BAN, piggy-backed to Loan 1478-BAN). Manila.
This amount was equivalent to SDR 55,660,000.
The PCR indicated that loan cancellation amounted to $31,360,929.61 million equivalent. Following the
last disbursement of the ADF loan, ADB canceled the remaining balance of $1,358,171.49 equivalent on
loan closing, reducing the ADF loan amount to $51,513,601 equivalent. Following the last disbursement of
the OCR loan, ADB canceled the remaining balance of $5,904,928.72, reducing the loan amount to
$16,095,071.28.

2.
Project Scheduling and Implementation
25.
The project was approved on 29 November 2000 and it became effective on 10
September 2001. The targeted loan closing date was 30 June 2005 for both the ADF
and ordinary capital resources (OCR) loans. ADB approved the reallocation of a portion
of the ADF loan to the further preparation of the feasibility study and detailed design
of the DhakaChittagong Expressway. The feasibility study and detailed design were
completed on 9 March 2008, 7 years after loan approval. The government requested an
extension for loan closing five times, which ADB approved: three for the ADF loan and
two for the OCR loan. The project was originally scheduled to be implemented over 4.0
years, including preconstruction activities. In practice, construction took about 7.4
years (89 months), an overrun from the plan by about 43 months (108%).
26.
The main causes of the delays were: (i) protracted implementation of land
acquisition and resettlement of affected people; (ii) protracted government approval
procedures for the recruitment of construction engineering firms, and an interim
operation and maintenance contract for the CPAR; and (iii) the time taken to prepare
the feasibility study and detailed design for the DhakaChittagong Expressway. 10 A
total of 17.8 ha of land affecting 2,366 persons was acquired for the CIC, which was
substantially less than the 58.6 ha and 8,229 people originally estimated in the RRP. In
terms of procurement, a total of eleven packages, comprising nine civil works, and one
each for construction supervision and feasibility study and detailed design, were
competitively tendered over a time frame of about 2.5 years from issuing expressions of
interest to awarding the contract. Details are presented in Appendix 2.
27.
The RHD was the executing agency for the project. The Office of ADB Projects in
the RHD was headed by a full-time additional chief engineer who was the project director
and reported to the RHD chief engineer. For the CIC, a full-time superintending engineer
was assigned as an additional project director and chief resettlement officer, reporting
to the project director. The superintendent was supported by an executive engineer and
three RHD project managers responsible for day-to-day implementation. For the RMC,
an additional chief engineer from the RHD was assigned as the project director for the
contracts under the first-year cycle and was responsible for overseeing the selection of
subprojects, procurement, monitoring, and reporting for the second- and third-year
cycles.11 Executive engineers, as project managers of the subprojects, were responsible
for overall implementation, administration, and financial management of subprojects.
28.
At appraisal, it was expected that supervision consultants would be engaged
for a total of 1,058 person-months over a 42-month period. This figure was comprised
of 178 person-months of international consulting services and 880 person-months of
national consulting services. The consultants were mobilized in October 2001. Due to
delays in project implementation, the project required additional consulting services.
The actual consulting services amounted to 1,381 person-months, an increase of about
30%. This increase was comprised of 222 person-months for international experts and
1,159.1 person-months for national experts, over a 66-month period. 12 The
10
11
12
The feasibility study and conceptual design for a four-lane DhakaChittagong access-controlled
expressway, were prepared with funding from an ADB project completed in 2008. The studys progress
was slower than anticipated and the approval by the Government Purchase Committee for the feasibility
study of the DhakaChittagong Expressway was also significantly delayed.
Contract administration and other day-to-day implementation activities were delegated to RHD zonal
offices, headed by the zonal additional chief engineer, who was supported by superintending engineers,
executive engineers, and other staff members.
Supervision consultants services were extended for RMC contracts, CIC contract 4, and the time overrun of
CIC contracts 24. These were undertaken by the consultants with no additional costs.
The project was

originally
scheduled to be
implemented
over 4 years,
including
preconstruction
activities, but
construction
took about 7.4
years
The delays were
due to
protracted
implementation
of land
acquisition,
government
approval
procedures, and
preparation of
the feasibility
study

engagement of consultants followed ADBs Guidelines on the Use of Consultants
(2010, as amended from time to time).
29.
The loan agreement had 27 covenants, of which, 17 covenants pertained to
sector policies and the balance related to implementation arrangements. One of these
implementation covenants concerned environmental mitigation, two pertained to
resettlement, one concerned financial matters, and six were related to project
performance monitoring, implementation, and financial auditing. A total of 23
covenants were complied with and four covenants were partly complied with. Sector
covenants 1 and 2 on sustainable road maintenance funding and covenant 6 on
performance audits were partly complied with. 13 Of particular note, the road
maintenance fund has not been established and is still under review by the Ministry of
Finance, there is no time-bound action plan to implement such a mechanism, and no
performance monitoring arrangements have been defined or agreed. Further details are
presented in Appendixes 3 and 4.
F.
Project Outputs
1.
A total length of
113.2 km was
improved,
slightly more
than the 111 km
planned at
appraisal
Project Outputs of the Corridor Improvement Component
30.
Output indicators presented in the project framework were: (i) road
construction, (ii) a policy and legal framework for toll-funded private sector operation
and maintenance, and (iii) a legal framework for controlled access highways. The PPER
mission confirmed that all three output indicators were fully achieved.
31.
Road construction: A total length of 113.2 km was improved, slightly more
than the 111.0 km planned at appraisal. These covered the overlay and widening of the
Chandina, Comilla, and Feni bypasses (51.8 km); upgrading and widening of the Feni
Chittagong section (47.9 km); construction of the CPAR (13.6 km) as a pilot for PPP;
and detailed design of an ensuing road sector loan (Table 1).
Table 1: Corridor Improvement Actual Costs by Subproject
Contract
Number
1
2
3
4
Road Section
Overlay and widening of Chandina, Comilla, and Feni bypasses
Upgrading and widening of FeniChittagong section 1
Upgrading and widening of FeniChittagong section 2
Construction of Chittagong Port access road (new)
Length
(km)
51.8
25.4
22.5
13.6
Amount
($ million)
19.15
30.85
18.81
km = kilometer.
Source: ADB. 2009. Project Completion Report.
32.
Policy and legal framework for toll-funded private sector operation and
maintenance: The governments policy on private sector participation was approved in
March 2005, which resulted in a private concessionaire taking control of the toll
collection and routine maintenance of the CPAR. The draft contract prepared by the
consultant was approved in February 2006. Due to the delayed selection of the
concessionaire, the civil works contractor undertook a 1-year interim contract on toll
collection and operation and maintenance of the CPAR. A private concessionaire,
MonicoATT Consortium, took over after completion of the interim contract in October
2008 and is the current toll road operator.
13
This required an enactment of a new law and up to the time of the IED field visit was still undergoing final
revisions by the Ministry of Communications.
33.
Legal framework for controlled-access highways: The government introduced
the rules under the Highway Act of 1925 to provide a legal provision for access control
and a regulation under the MVO of 1983. This regulation was designed to enforce
access control primarily at the CPAR to prevent slow-moving vehicles and pedestrians
from using the highway, control roadside development, and give the RHD or a private
concessionaire the authority to manage the highway. The provisions were fully
implemented.
2.
Project Outputs of the Road Maintenance Component
34.
The output indicators presented in the project framework for the RMC were: (i)
a policy framework for road maintenance adopted and implemented covering the
national land transport policy; (ii) maintenance selection system; (iii) budgeting and
human resources; (iv) sustainable financing sources for maintenance; and (v) sealing
and overlay of priority roads within annual road maintenance plans. Of these, the first
two indicators were fully achieved and three were partially achieved. The national land
transport policy was adopted and implemented and a road maintenance selection
system was developed and used.
35.
Adoption and Implementation of the National Land Transport Policy: The
government approved the national land transport policy on 24 April 2004. This
redirected the RHDs major undertaking toward road maintenance from capital
projects, and established and approved a clear distinction of responsibility for road
maintenance between the RHD and the local government engineering department
(LGED). The RHD was responsible for the maintenance of the primary and regional
roads and a limited number of feeder roads, while the LGED was responsible for the
maintenance of rural and feeder roads. The RHD was further tasked to utilize a system
to prioritize road maintenance using the HDM-4 model. The government then decided
to merge this policy with the existing shipping policy, add policy issues related to air
transport, and prepare a comprehensive multimodal transport policy.
36.
Maintenance selection system: To optimally disburse maintenance funds to the
road network, the RHD has employed the HDM-4 model to select and prioritize
maintenance works since FY19992000. A report of road maintenance and
rehabilitation work is prepared every year to assess whether or not the 5-year
investment plan met the acceptable levels of service provision for the RHD road
network.
37.
Maintenance Budgeting: A periodic maintenance budget still has to be
separated from the road development plan. ADB agreed with the government that the
RHD be given a budget exclusively for periodic maintenance to be included in the ADP
expenditures related to periodic maintenance for roads under the jurisdiction of the
RHD. The government initiated a proposal to establish a separate maintenance budget
in 2003, which was undertaken for FY2004. The government now provides a nondevelopment revenue budget in the ADP for the maintenance of roads, bridges, and
highways. All non-maintenance works continue to be carried out under the RHDs
annual road maintenance budget.
38.
Maintenance financing: The government agreed to review the funding
mechanisms of the ARMP from domestic sources and prepare and implement a timebound action plan to meet the annual maintenance costs of all roads under the RHD to
an acceptable standard. The Road Fund Board Act is expected to help improve road
The national
land transport
policy was
adopted and
implemented
and a road
maintenance
selection system
was developed
and used, but
others were
only partially
achieved
10
Road sections
totaling 369.5 km
were improved
through periodic
maintenance
work, short of its
targeted level

maintenance financing, but at this stage there is no firm commitment from the
government to meet this funding obligation.
39.
Sealing and overlay of priority roads within the ARMP: Road sections totaling
369.5 km were improved under the ADB loan through periodic maintenance work
under five contracts. This result was far short of its targeted level of 250400 km each
year over a 3-year period. Implementation of the RMC was significantly delayed due to
the change in the procurement arrangements envisioned during appraisal, which
protracted prequalification procedures for contractors and formalities of government
approval.
CHAPTER 3
Performance Assessment
40.
This chapter examines the projects performance as per standard evaluation
criteria. The projects contribution to institutional development and its socioeconomic
impact are also examined.
A.
Overall Assessment
41.
The project is rated less than successful. The main impacts indicated in the
projects design and monitoring framework (DMF) were enhanced economic growth
and reduced poverty in the project areas. As there were no baseline data it is not
possible to fully assess whether impacts were achieved. The projects main outcome
was improved transport efficiency in the project areas. This was only partially achieved
due to lack of progress on maintenance objectives. Some progress was made
developing a new law permitting private sector participation and the establishment of
a road maintenance fund. However, the government has not made any progress on
actually committing funds to the maintenance fund. Implementation was subject to
long delays, reducing overall efficiency. The probability of the projects sustainability
has improved following the enactment of the new law, but it is still uncertain due to
the governments lack of commitment for funding.
42.
Table 2 summarizes the ratings for the four evaluation criteria and
corresponding weighting given to each criterion.14 The project is rated relevant, less
than effective, efficient, and less than likely sustainable.
Table 2: Overall Performance Assessment
Criterion
Relevance
Effectiveness
Efficiency
Sustainability
Total rating
Assessment
Relevant
Less than effective
Efficient
Less than likely
sustainable
Rating (13)
2
1
2
Weight (%)
25%
25%
25%
25%
Weighted Rating
0.50
0.25
0.50
0.25
1.50
Source: Independent Evaluation Department estimates.
B.
Relevance
43.
The project is rated relevant. The project was aligned with the governments
development strategies and ADBs country assistance strategies, both at project
appraisal and completion. Its objectives were pertinent to address the issues affecting
the poor condition of Bangladeshs road network, the need to expand road capacity,
and the insufficient financing sources for the roads periodic maintenance. The projects
14
The evaluation criteria focus on the projects performance, following the Independent Evaluation
Departments (IEDs) guidelines of four evaluation criteria: (i) relevance of the project to the governments
and ADBs development strategies, and project design; (ii) effectiveness of project implementation,
outputs, and outcomes; (iii) efficiency of its design and implementation; and (iv) sustainability of the
project outputs and outcomes.
The project is
rated less than
successful,
relevant, less
than effective,
efficient, and
less than likely
sustainable
12

intended impacts, outcome, and outputs were consistent with the governments
development strategies as presented in the Fifth Five-Year Plan (FYP) for 19972002 and
ADBs country assistance plan for 20012003.15 ADBs country assistance plan for 2001
2003 established poverty reduction as the primary objective and road infrastructure as
an important instrument.16
44.
In 2000, at the time of appraisal, the countrys transport network, especially
along the main transport corridor, the DhakaChittagong Corridor, suffered from
severe and chronic congestion and insufficient maintenance. Given the scale of the
funding requirements, the government needed external financing to reduce the
maintenance backlog. The government also needed to put in place various mechanisms
to conduct periodic maintenance on a sustainable basis, which included a policy
commitment to maintain roads and to allocate funds for a periodic maintenance
budget up to the level required for sustainability.
45.
The project supported ADBs country partnership strategy, 20112015 for
Bangladesh, which aims to provide assistance within Strategy 2020s development
agenda of inclusive economic growth, environmentally sustainable growth, and
regional cooperation.17 The project prioritized private sector development to accelerate
growth by addressing major infrastructure constraints and skill gaps, improving the
regulatory setting, and enhancing capacity for PPP and private sector investments and
supporting suitable PPP projects once identified, including those in the transport sector.
46.
The project design addressed the critical issues of improving road maintenance,
piloting private sector maintenance of roads, and developing a policy and institutional
framework to support these initiatives. Offsetting this result, the design was not
sufficient to achieve the program objectives, particularly on maintenance. In the
absence of an effective maintenance framework under the CIC, it is not clear why the
focus of the project was on constructing new capacity, rather than increasing the
effective capacity of the existing network by investing in maintenance. Other things
being equal, the economic returns were more likely to be greater for investment in the
maintenance of existing assets, rather than in developing greenfield capacity that could
not be maintained. 18 Only 30% of the RMC maintenance component was implemented,
and the road maintenance framework was not operationalized. More success could
likely have been achieved if technical assistance had been used to design and develop
maintenance capacity before disbursing the loan, and linking disbursements to
achievement of pre-agreed milestones.
47.
The underlying logic in the project DMF was also weak. For instance,
implementing the reform measures such as the legislation of the Road Fund Board Act
took substantial time, much more than expected at appraisal, and could extend beyond
the projects implementation period. Similarly, for the nonphysical elements, even if
they were achieved as planned, they would be unlikely to immediately accompany the
intended outcomes. However, the project DMF assumed this outcome would be the
case, and it did not recognize this potential mismatch. An example is the enhanced
15
16
17
18
A key element is to improve integrated multimodal transport encompassing railways, roads, and inland
water transport having connectivity with the countrys neighbors. Under the Sixth Five-Year Plan, a top
priority is to build transport network corridors that provide regional connectivity to the national ports of
Chittagong and Mongla. Planning Commission, Ministry of Planning, Government of the Peoples Republic
of Bangladesh. 2011. Sixth Five Year Plan FY20112015: Accelerating Growth And Reducing Poverty.
ADB. 2000. Country Assistance Plan (20012003) for Bangladesh. Manila.
ADB. 2011. Country Partnership Strategy Bangladesh (20112015). Manila.
This conclusion is reinforced by the economic internal rates of return (EIRRs) presented in the RRP for
maintenance versus new construction.
level of private sector participation in roads projected in the RRP. It was assumed that
realization of the policy elements would mean that private sector participation in roads
was promoted. In fact, although the key elements of the policy and legal framework
were successfully implemented, the actual level of private participation in roads was
not noticeably increased. Considering the significant gestation period and the time lags
for these policy initiatives, the assumption that the policy actions would have
contributed to the project performance appeared to be too presumptive. It is more
likely that the realization of intended policy reforms may benefit future road projects
performance, and therefore should be considered in the context of sector level
performance rather than an individual projects performance.
C.
Effectiveness
48.
The project is rated less than effective in achieving the outcomes of the project as
defined in the DMF.
49.
The actual outcome at the time of project completion could not be assessed
against baseline targets as the DMF prepared at appraisal did not present any outcome
targets or values of the vehicle operating costs (VOCs) and average journey times that
could be used as a baseline for deriving estimates of savings for comparison purposes.
However, the economic analysis in the RRP assumed growth rates for demand starting at
8% per year to 2007, declining to 6% from 2008 to 2012, and to 5% from 2013
thereafter. The PCR reviewed these estimates in 2007 and found that for the Chandina,
Comilla, and Feni bypasses the actual growth exceeded the target in the RRP for 2007 by
2%, whereas there was a traffic shortfall of 39% for the FeniChittagong component,
and a shortfall of 72% for the CPAR.
50.
During the IEM field visit, travel times from Dhaka to Chittagong and the CPAR
were observed. The RHD officials accompanying the mission validated the reduction in
travel time compared to the without-project situation. However, since there were no
baseline data available to the IEM, the measured reduction in travel time could not be
compared with the baseline data. The PCR estimated that the project reduced travel
time by 20 minutes to 45 minutes between Chittagong and major cities. These time
savings could not be validated without baseline travel-time data either from the DMF or
from the required baseline survey under the project performance monitoring system.
Based on the road condition level of international roughness index (IRI) 2 and withoutproject road condition of IRI 6.0, the estimated per-km VOC savings using HDM-4
ranged from 8.5% to 12.0%, while travel-time savings per km under the same
assumptions ranged from 12.3% to 25.3%. Available traffic count data collected by the
IEM from the RHD validated the effectiveness of the roads in facilitating vehicle
movements, especially in the more congested and heavily trafficked areas such as
Chandina, Camilla, Feni, and Chittagong. Traffic volume on the CIC road sections is
usually high, as it is the main corridor between Dhaka and Chittagong, with its major
international port. From 2007 to 2011, actual traffic on the Chandina, Camilla, and Feni
bypasses increased by 17.0% per year and on the SitakundaChittagong section by
11.7%. These exceeded the annual forecast growth rate of 9.0% for the 20072011
period. In the FeniMirsarai section, traffic growth for the 20072011 period was only
4.5% per year, less than the 9.0% forecast growth rate. A section of the RMC roads
leading to Coxs Bazar, a major tourist area, also shows heavy vehicular traffic, where
the actual traffic growth on the ChittagongCoxs Bazar section was 22.9%. Therefore,
the projects intended outcome for the physical constructionimproved transport
efficiencyhas reasonably been achieved in the project areas, as measured by traffic
growth, travel-time savings, and reduction in VOCs.
13
14

51.
For the RMC, only 30% of the maintenance program envisaged in the RRP was
implemented, and there is no evidence of improvements in maintenance as a result.
Three of the five suboutputs were not achieved. These included: (i) the road length on
which periodic maintenance work was implemented; (ii) the budget for period
maintenance, which continues to be lumped with the annual road development
budget; and (iii) sources of funding for the road fund that are still not secured.
Given that improvements in maintenance were a primary objective underpinning
the program, the absence of these outputs is a significant shortfall.
D.
Efficiency
52.
The project is rated efficient in the use of resources to achieve its intended
outcomes and outputs. Procurement and implementation of resettlement plans were
delayed, which meant the loans were disbursed more slowly than planned at appraisal.
Actual implementation of all components took approximately 7.5 years (89 months)
an overrun of about 3.5 years, in effect more than doubling the original construction
period. The PCR reported that there was a substantial shortfall in demand for the CIC,
reducing the baseline benefits. Only 30% of the RMC was implemented, further
reducing benefits and the derived efficiency of the loan. Offsetting this result, there
were large cost savings arising from the low cost of civil works, compared to the
original estimates.
53.
The RRP estimated an economic return for the CIC of 37%, and this was revised
downwards to 28.6% in the PCR. For the RMC, the RRP provided hypothetical estimated
economic internal rates of return (EIRRs) that ranged from 118% to 462%. Despite the
shortfall in demand growth identified in the PCR for the FeniChittagong section and
the CPAR, the re-estimated benefits of the CIC were 28.6% and the RMC economic
benefits ranged from 32% to 165%. The combination of assumption used in the PCR
derived a compound annual growth rate for project economic benefits of 29% over 20
years, resulting in a 1,000-fold increase in real benefits over a 20-year period. This growth
is far in excess of gross domestic growth (GDP) growth rates, and does not take into
account likely congestion, which will negatively impact available capacity and associated
traffic flows.
54.
In re-estimating project benefits, the PPER team used updated information,
especially traffic data. The PPER team collected data on (i) available classified traffic
counts for each road section, (ii) the road condition survey conducted during the PPER
mission, and (iii) 20042005 VOCs. The RHD is currently undertaking the four-laning
work of the DhakaChittagong Highway, totaling 192.30 km of road. This project
involves the construction of 28 bridges, including five major bridges, three flyovers over
the railway lines, and two underpasses. 19 This four-laning work will likely negatively
affect the traffic level, forecast at appraisal and completion, along the CIC and RMC
subsections of the DhakaChittagong Highway. 20 For a conservative estimation, the
PPER team adjusted the traffic forecast level of appraisal and completion for the
abovementioned road sections downward by 50% from 2014 onward, once the four
lanes along the DhakaChittagong Highway are completed. The two-lane project road
will henceforth carry traffic in only one direction, while the additional two lanes will
19
20
In parallel with the four-laning work, the existing two lanes are being overlaid to match the road
conditions of the two new lanes. Under the existing contracts for the four-laning, the contractors have
been responsible for the routine maintenance of the existing highway since the start of the project.
The subsections affected by the four-laning work for the CIC are the Chandina, Comilla, and Feni bypasses,
and the FeniChittagong section; for the RMC, they are the DaudkandiChandina bypass, end of Chandina
bypassstart of Comilla bypass, and end of Comilla bypassstart of Feni bypass.
carry traffic in the opposite direction. The recalculation of the EIRRs reconfirms the
projects economic viability. The recalculated EIRR for the CIC subprojects was 17.1%
and the recalculated EIRR for the RMC subprojects was 17.4%. This result assumes that
the project infrastructure is fully maintained. Details are presented in Appendix 5.
E.
Sustainability
55.
The PPER assesses the project less than likely sustainable by examining (i)
government ownership and commitment to the project, (ii) appropriate policies to
ensure continued funding for maintenance of the project roads, (iii) appropriate
policies to ensure the maintenance of required human resources, and (iv) financial
viability of operating entities.
56.
At completion, some concerns were raised that may affect the projects
sustainability, such as: (i) some project road sections were already damaged at project
completion, requiring maintenance work; (ii) funding for sustainable maintenance was
still unsecured; (iii) the weighbridge station along the project road was not yet
operational at completion and so overloaded vehicles continued to be a problem. The
PPER, conducted 5 years later than the PCR, noted several new developments. It notes
that the recent approval and implementation of the Road Fund Board Act may provide
a legal basis for a sustained stream of revenue for financing road maintenance. Further,
the recently passed Road Fund Board Law aims at raising funds for road maintenance
and supervision works from road taxes, motor vehicle taxes, motor vehicle fitness, route
permits, registration and license fees, road cutting and utility fees, and road penalties.
Meanwhile, there continue to be serious concerns about maintenance funding. In
particular, the road maintenance fund has not been established and is still under review
by the Ministry of Finance. This negatively affects the projects sustainability, and
affects both the CIC and the RMC. Further concerns arise due to the poor financial
performance of the CPAR component of the CIC. During the PPER, a financial internal
rate of return (FIRR) on the CPAR was recalculated at -2.47%, indicating that traffic
volumes from the CPAR are not sufficient to recover the operation and maintenance
and investment costs.21 The PCR noted that in 2007 actual traffic volumes were only
about 25% of estimated volumes.
57.
While the government has taken some important steps to address the issue of
sustainability, it continues to demonstrate a lack of commitment to provide a
sustainable source of funding needed to maintain the project assets. Similarly, the
CPAR is not generating sufficient revenues from tolls to sustain the operation. In the
light of these findings, the PPER rates the project less than likely sustainable.22
21
FIRR for the PPER is lower than the appraisal FIRR but higher than the PCR FIRR. The differences in FIRRs
estimated at appraisal, completion, and PPER were mainly due to updated traffic forecasts at each time. At
appraisal, high levels of diverted and generated traffic were estimated for the toll road; at completion, the
traffic forecasts were adjusted significantly downward, based on existing traffic. At the PPER, the normal
traffic forecast was adjusted upward, considering persistently growing traffic levels of cargo and
containers at Chittagong Port. Based on Chittagong Port Authority statistics, total cargo volumes
comprising imports and exports from 2006 to 2011 increased by 9.8% annually, container traffic increased
by 9.7% annually, and vessel calls increased by 2.8% annually. Given such a growth scenario, it is expected
that CPAR traffic will continue to increase. Details are in Appendix 6.
22
The individual components ratings were aggregated using weights, RMC (28%) and CIC (72%), reflecting
the relative importance of the component to expected overall project outcomes and the cost of each
components ADB-funded civil works as a percentage of the total civil works cost funded by the ADB loan.
15
16
F.
Development Impacts
58.
The project framework indicates that the projects targeted goals were
enhanced economic growth and reduced levels of poverty in the project areas. The
qualitative performance indicators formulated at appraisal included increased
competitiveness of industry and agriculture, increases in the GDP and expansion in
employment and earnings, and improvement in social indicators. However, the
framework had neither quantifiable targets nor baseline information for performance
indicators. No poverty impact survey was conducted at PCR.
59.
The projects achievement, listed in the project framework of the PCR, was
growth in the regional GDP by about 6% per year for the period 20042008. The PCR
indicated that economic development was stimulated and employment was increased.
The governments national statistics showed that the upper level of poverty fell from
52% in 1999 to 43% in 2007. Lower-level poverty decreased from 46% in 1999 to 20%
in 2005. However, the PCR did not provide any meaningful discussion on how much
the reduced rate of poverty was attributed to this project. The PPER therefore finds it
hardly conclusive that the countrys macroeconomic achievement during the period (in
terms of GDP growth and reduced poverty rate) was attributed to the project, as
claimed by the PCR.
1.
Impact on Institutions
60.
The RHD benefited from specific outputs that were produced under the project
or loan covenants. The governments commitment and ownership of the transport
reform initiatives strengthened the credibility of the project during implementation.
Some of these initiatives delineated roles for institutions and contributed to capacity
development. The national land transport policy, approved in April 2004, clearly defines
the responsibility of the RHD and the LGED: The RHD is responsible for national and
regional highways and Type-A feeder roads, while the LGED is responsible for major
parts of feeder roads.23
61.
The establishment of the Road Fund Board, consisting of 13 members, paves
the way for forming the self-financed Road Fund in Bangladesh. Once this framework
becomes operational, it will provide the RHD with a sustainable stream of revenues to
cover current road maintenance requirements and backlogs that have accumulated
through the years. Also, the amended rules for enabling and enforcing access control
and the policy and guidelines for private investment in highway projects, when
implemented fully, will alleviate the RHDs burden in maintaining national roads as
vehicle traffic diverts to private toll road facilities. Given that the environment for
developing sustainable roads was not realized by the project, the impacts on
institutions were less than satisfactory.
2.
Socioeconomic Impact
62.
The land acquisition and resettlement plan provided compensation for losses
incurred by affected persons, and rehabilitation measures that would benefit the
community. The PCR reported that no resettled person was in worse condition as a
result of the project and that no issues relating to indigenous peoples and/or ethnic
23
Except the zilla roads, which are Type-A feeder roads connecting the district headquarters or a major
national road network. The zilla roads were mandated to the RHD for development and maintenances.
minorities arose during project implementation. The broader socioeconomic benefits
generated by the project were reduced travel time to nearby cities, towns, and growth
centers; increased economic opportunities to local residents and diversified sources of
their income; expanded social interactions and participation in community activities;
and increased participation by women in economic and social activities. Focus group
discussions and household surveys were conducted as part of the socioeconomic field
work for the PPER. The field assessment indicated that after the roads were improved,
more people opted for professions other than agriculture, bringing new employment
and trading opportunities. More people have set up small businesses, diversifying
income sources to include agriculture, small trade, manufacturing industries, small and
medium-sized enterprises (SMEs), and service institutions such as schools. New
economic opportunities in the region have led to an increase in household wealth,
increasing household assets and diversification of economic activities. Farmers and local
producers directly sold their produce to urban-based wholesalers and retailers rather
than to middlemen. The urban-based wholesalers and retailers of agricultural products
now reach the production sites, reducing transportation cost and travel time.
63.
The project has promoted trade and business activities significantly. Local
people established small businesses, creating more job opportunities. Investors from
large cities such as Dhaka and Chittagong now invest in the region, resulting in more
job opportunities. Investors have built hotels and established highway restaurants
catering to the needs of inter-district passengers, creating more employment
opportunities. There has been a significant increase in the number of light vehicles,
making it easier for farmers and local businesses to transport various products and
goods, including electronic home appliances, agricultural products, and products
manufactured by SMEs in the rural areas. The project roads have enabled the local
people to easily access institutions and social services (Appendix 7).
64.
Offsetting this result, with the improved project road conditions, large vehicles
such as buses, trucks, microvans, and others can operate at higher speeds, resulting in
an increased number of traffic accidents. Focus group discussions recommended that
road dividers be provided to avoid the numerous head-on collisions that have become a
regular occurrence and a major concern of villagers along the road. Overall, the project
generated positive benefits, but the absence of benchmarks and reliable survey data
makes it difficult to make a case that the project achieved its stated socioeconomic
impacts.
3.
Environmental Impact
65.
Based on the PCR, the government prepared an initial environmental impact
study, with the CPAR being the major focus of attention since it was to be built on a
new alignment. Other CIC and RMC activities were on existing roads and therefore had
minimal adverse impacts on the environment. On the whole, the assessment found that
neither component would have significant adverse environmental impacts. The
consultants prepared guidelines for an environmental management and monitoring
plan. The project was found to be compliant with the mitigation measures and
monitoring requirements cited in the plan.
66.
This finding was also confirmed by the PPERs socioeconomic and impact
evaluation, in which the local population, representatives of local councils, and various
government agencies observed that the project did not pose any major environmental
problems. Currently, people living adjacent to the project roads have complained of
noise and air pollution, especially during the dry season. In Chittagong, the CPAR has
17
18

functioned as a flood protection embankment, protecting the villages along the road
from flash floods and subsequent waterlogging. As with the socioeconomic
assessment, given shortfalls in demand, and in the absence of benchmarks and reliable
survey data, it is difficult to make a case that the project achieved its stated
environmental impacts.
G.
ADB Performance
67.
The project was initially administered by ADB headquarters. Its administration
was transferred to the Bangladesh Resident Mission in January 2004. This change made
it easier to monitor project implementation activities. Compliance with the loan
covenants was facilitated through the resident mission's efforts, especially those
pertaining to coordination with the executing agency and conduct of regular policy
dialogues with the government.
68.
During project implementation, ADB conducted 16 missions and provided
advice on technical issues, bid evaluations, and loan administration. Some of the
missions followed up on the loan covenant for the establishment, staffing, and
operation of a project performance monitoring system, including baseline surveys for
performance indicators and updates. As reported in several mission reports, it was
expected that this requirement would be included in the executing agencys PCR. This
did not materialize and what was provided was highly inadequate. During the PPER
mission the executing agency indicated that it was generally satisfied with ADBs
performance and that ADB had responded in a timely manner to their requests and
inquiries. The performance of ADB is rated satisfactory.
H.
Borrower and Executing Agency Performance
69.
The PCR rated the performance of the borrower and executing agency
satisfactory. The RHD had effectively managed physical implementation of the project,
although delays occurred in approvals at various stages of procurement due to

bureaucratic procedures. This affected the overall project implementation schedule and
triggered the need for loan extensions. Civil works were delayed due to land acquisition
and resettlement issues. The borrower made available necessary counterpart funds in a
timely manner. There were no undue delays in approving payments to the consultants
and contractors.
70.
It was noted at appraisal that the RHD, assisted by consultants, would establish
a project performance monitoring system. The key indicators for monitoring were
defined in the DMF. Although limited information is available, such as traffic data,
monitoring was not undertaken as envisaged at appraisal. There is no evidence that
project benefit monitoring surveys were conducted on poverty, employment, earnings,
and social indicators in the project area.
CHAPTER 4
Issues, Lessons, and FollowUp Actions

71.
This chapter discusses issues and lessons pertinent to the project. The lessons
provide pointers for follow-up actions.
72.
Time dimension of the reform process. Implementing policy initiatives entails a
complex and long-term process. In general, sufficient time is needed to build political
consensus, strengthen institutional capacity, and put in place necessary enabling
conditions for reforms. The legislation and policy measures that were enacted required
fundamental changes among institutions, which cover a longer time horizon and add
some uncertainty as to the timing of realization of actual outputs and outcomes. The
full extent of reforms, especially the institutional type, may extend well beyond the
usual administrative life of a project loan. Also, performance targets entail time lags
and as such, their effects could not be readily realized within the time frame presented
in the DMF. More success would likely have been achieved if ADB had provided a
greater amount of technical assistance to help develop institutional capacity for
procurement and establishment of the road maintenance fund prior to the processing
of the loan.
73.
Baseline data collection is a priority. At appraisal and during implementation,
greater attention should have been given to the DMF, especially to establishing
measurable indicators and their baseline values, and target values with realistic time
frames. In particular, the indicators measuring socioeconomic impacts should have
been carefully designed, their initial values measured and presented, and their updates
monitored throughout the project period as well as at completion. Higher priority
should have been given to ensuring that baseline data were collected and reported
during project implementation. The absence of these data made independent
evaluation of the project considerably more difficult.
74.
Private sector participation. Based on the evaluation findings, one follow-up
action is proposed: ADB should closely monitor developments on the CPAR, especially
on the development of vehicle parking facilities by the private sector and the
adjustment of toll fees to cope with the increased costs of toll road operations and
maintenance. The government should carefully consider lessons learned from the pilot
PPP to make future projects more successful. Credible traffic forecasts and tolls that are
set at full cost recovery are essential if the private sector is to be incentivized to
participate in the transport sector.
75.
Project design and risk analysis. The mitigation measures identified in the RRP
to address project risks were largely unsuccessful, and the project was subject to long
delays, problems with land acquisition and procurement, shortfalls in demand, and
insufficient funding for maintenance. Despite advance procurement actions, enactment
of legislation for maintenance, and establishment of controlled access arrangements
for CPAR, the expected results were not achieved. In part, the problem appears to be
Implementing
policy initiatives
entails a
complex and
long-term
process
At appraisal and
during
implementation,
greater attention
should have
been given to
the DMF
20

attributable to weaknesses in the project design, in which the feasibility study and
detailed design were not completed until 9 March 2008, seven years after loan
approval. A greater level of upfront investment in project preparation, particularly in
the areas of preparing credible traffic forecasts and identifying road alignments, could
pay large dividends. Similarly, credible solutions can be developed upfront before
finalization of the loan to address perennial areas such as delays in land acquisition and
procurement.
76..
Road Maintenance Fund. The financing and adequacy of funding for the Road
Maintenance Fund is a critical risk for the CIC that needs to be monitored.
Appendixes
APPENDIX 1: DESIGN SUMMARY

Summary Design and Monitoring Framework Showing Project Achievements Against Intended Impacts,
Outcome, and Outputs (IED)
Design Summary
Impact
Promoted economic
growth in project
target areas
Reduced poverty in
project target areas
Performance
Indicators/Targets
Increased competitiveness
of industry and agriculture
Increased the gross
domestic product and
expanded employment
and earnings
Improved social indicators
Outcome
Improved transport
efficiency in project
target areas
Within project target

areas, achieved transport
efficiency gains in terms of
savings in travel time,
transport costs for
passengers, and VOCs
Assessment
Project Achievements
No targets were
given at appraisal.
However,
fieldwork during
PPER activities
indicated that the
impacts are
considered to have
been generally
achieved.
- Reduced travel time to nearby cities and

growth centers, subdistrict towns, and
district towns
- Increased economic opportunities
- Diversified household income sources
- Expanded trade
- Increased private investment from other
regions into the project areas
- Increased social interactions and
participation in community activities
No targets were
given at appraisal.
However, the
outcomes are
considered to have
been generally
achieved.
From the economic reevaluation

conducted, net travel time savings
achieved by 2012 were estimated at Tk
1,114 million ($19.3 million) for the CIC
and Tk 31 million ($0.54 million) for the
RMC. By 2027, expected travel time
savings were estimated at Tk 4,143 million
($71.7 million) for the CIC, and Tk 189
million ($3.3 million) for the RMC.
For reduction in VOCs for 20072012, the
reevaluation estimated net savings at Tk
6,696 million ($115.9 million) for the CIC
and Tk 1,803 million ($31.2 million) for
the RMC. By 2027, net VOC savings were
estimated at Tk 27,664 ($478.8 million)
million for the CIC and Tk 10,038 million
($173.7 million) for the RMC.
Output
1. Road Maintenance
1.1
Policy framework
for road maintenance
adopted and implemented
within 4 years of
effectiveness, covering the
national land transport
policy, maintenance
selection system,
budgeting and human
resources, and an
established sustainable
source of financing.
Mostly achieved
Savings in transport costs were not

measured.
There were no baseline values to
recalculate the percentage change in the
values of the indicators measured.
A national land transport policy was
approved by the Bangladesh government
on 24 April 2004 in which the
responsibilities of the RHD and the LGED
were clearly defined.
The maintenance selection system (HDM4) is being used to prepare the
maintenance and rehabilitation needs
report for RHD paved roads. This is used to
prepare the annual road maintenance
budget of the RHD.
A Road Board Authority Act has been
Design Summary
Design Summary
2. Corridor
Improvement
3. Legal framework and

enabling
environment for
private sector
participation in road
sector
Performance
Indicators/Targets
1.2
Sealing and
overlay of priority roads
within annual road
maintenance plan, 2002
03, 200405
2.1
Road construction
to be completed by March
2004: FeniChittagong (47
km)
Assessment
Project Achievements
drafted and circulated to the various
ministries concerned. At end of 2012, it
had not been approved and remains a
loan conditionality still to be achieved.
Only 369.5 km of road were sealed and
overlaid from 20052007 as against the
annual target of 250400 km over the
project duration.
Most road construction subprojects were
completed in 2007.
Achieved
Chandina, Comilla, and

Feni bypasses (52 km)
Achieved
Chittagong Port access

road (12 km)
Achieved
3.1 Policy and legal

framework for toll-funded
private sector operation
and maintenance
established by third year of
effectiveness.
Achieved
3.2
Legal framework for
controlled-access highways
established by 18 months
of effectiveness.
23
Achieved
Section 1: WahedpurBanshbaria.
New construction of 4.67 km,
reconstruction of 12.01 km, and overlay
of 8.76 km. Road safety improved by
widening concrete pavements and
footpaths in four market areas,
Barodarogar Hat, Hadi Fakir, Nizampur,
and Suklal Hat.
Section 2, BanshbariaAlanker
Cinema Hall. New construction of 2.60
km, reconstruction of 12.067 km, and
overlay of 7.795 km. Road safety
improvements by widening concrete
pavements and footpaths in 11 market
areas.
- Chandina, Comilla, and Feni bypasses
and overlay of two bridges, one at km
13.04 (90 m) and another at km 20.15
(160 m) on DhakaDaudkandi Road
- Marikhail Bridge 3 spans x 30 m
- Bhatir Char Bridge 169 m
- Road safety widening of concrete
pavement and footpaths in seven
market areas
New construction of 12.318 km and
overlay of 1.264 km. Bridges at km 4.33,
4.34, and 4.35.
The governments overall policy on private
sector participation was approved in
March 2005.
The government established enforcement
provisions under the MVO to (i) prevent
slow-moving vehicles and pedestrians
from using the highway, (ii) control
roadside development, and (iii) give the
RHD or a private concessionaire the
authority to manage the highway. These
were implemented.
CIC = corridor improvement component, HDM = highway development and management, IED = Independent Evaluation Department,
km = kilometer, LGED = local government and engineering department, m = meter, MVO = Motor Vehicles Ordinance, RHD = Roads
and Highways Department, RMC = road maintenance component, VOC = vehicle operating cost.
Source: Independent Evaluation Department.
APPENDIX 2: IMPLEMENTATION
Project Implementation Schedule (Appraisal, Preparation, and Actual)
Project Component
Q2
2000
Q3 Q4
Q1
2001
Q2 Q3
Q4
Q1
2002
Q2 Q3
Q4
Q1
2003
Q2 Q3
Q4
Q1
2004
Q2 Q3
Q4
Q1
2005
Q2 Q3
Q4
Q1
2006
Q2 Q3
Q4
Q1
2007
Q2 Q3
Q4
Q1
2008
Q2 Q3
Q4
Land Acquisition and Resettlement

Selection
Consulting Services
Supervision (CIC and RMC)
Corridor Improvement Component (CIC)
Pre-qualification
Pre-construction Stage
(CIC)
Bidding, Approval & Award
C-1
C- 2&3
Construction
(CIC)
Overlay and Shoulder Work

Sections not Needing
Resettlement of PAPs
Sections Needing
Resettlement of PAPs
BWDB Sections (7.3 km) and
Overlay (1.13 km)
C- 4
Other Sections
Road Maintenance Component (RMC)
RMC
First Year Cycle
(Recycle+Overlay)
Selection, Design,
Procurement (ICB)
1st Year Cycle
Implementation RMC 1
Selection, Design,
Procurement (ICB)
RMC
Second and Third Year
Cycle
WORK TERMINATED
2nd and 3rd Year Cycles
Legend:
Note:
Appraisal
Preparation
Actual
Actual inclusive of liability period.
ADB = Asian Development Bank, BWDB = Bangladesh Water Development Board, CIC = corridor improvement component, ICB = international competitive bidding, PAP = project-affected
people, RMC = road maintenance component.
Source: ADB. 2009. Project Completion Report: Bangladesh: Road Maintenance and Improvement Project (Loans 1789 and 1790). Manila.
APPENDIX 3: COVENANTS
Status of Compliance with Loan Covenants
Covenant
Sector
1.
Operations and Maintenance Financing. Within 2
years of loan effectiveness, an expert working group, with
composition and terms of reference satisfactory to ADB, will
complete a review of mechanisms for domestic funding of
the full requirements of the ARMP, including the option of
establishing a road maintenance fund, and submit its
recommendations to the government along with a timebound action plan for funding the full requirements of the
ARMP, with the existing backlog of periodic maintenance
being separately financed.
2.
Within 4 years of loan effectiveness, the government
will implement the recommendations of the expert working
group on mechanisms for domestic funding of the full
requirements of the ARMP under a time-bound action plan
acceptable to ADB, such that the government will meet the
annual costs of maintaining all roads under the RHDs
jurisdiction to a standard acceptable to ADB, with the
existing backlog of periodic maintenance being separately
financed.
3.
The borrower shall ensure that all periodic
maintenance expenditure under the RMC is expenditure for
the project over and above the existing maintenance
expenditure by the borrower.
4.
The borrower shall ensure that each civil works
contract for periodic maintenance under the ARMP using civil
works contractors shall amount to no less than $1,000,000
equivalent and be supervised by consultants.
5.
The borrower shall ensure that an ARMP satisfactory
to the Bank is prepared annually.
6.
Road Maintenance Policy. Within 2 years of loan
effectiveness, the government will approve a national land
transport policy satisfactory to ADB that will include (a)
establishing road maintenance as the priority activity of the
RHD; (b) clearly dividing responsibilities for feeder roads
between the RHD and the LGED, with the RHD being
responsible for national and regional highways and Type-A
feeder roads; and (c) determining all annual RHD road
maintenance expenditure in accordance with the HDM
ranking of road maintenance priorities in the ARMP.
7.
The borrower shall ensure that the RHD shall only
have jurisdiction over feeder roads that meet the criteria of
Type-A feeder roads.
8.
Maintenance Budgeting. The government will
ensure that the consolidation of all ADP expenditures on RHD
periodic maintenance for roads for the ARMP will be
completed by June 2001 in form and substance satisfactory
to ADB, and will be maintained on an annual basis for no less
than 5 years.
9.
Within 18 months of loan effectiveness, the
government will review existing maintenance expenditures
under the RB, introduce a reclassification of RB maintenance
expenditures by maintenance function, and ensure that
Reference in Loan
Agreement
Schedule 6, para. 8
Schedule 6, para. 9
Status of Compliance
Partly complied with.
Although the review was
completed,
a
timebound action plan was
not
established.
In
addition,
the
road
maintenance fund has
not been established and
is still under review by
the Ministry of Finance.
The road fund has still
not been established.
Schedule 6, para. 10
Complied with
Complied with
Complied with
Complied with
Complied with
Complied with
Complied with
26
Appendix 3
Covenant
periodic maintenance expenditure under the RB is assigned
in accordance with the ARMP.
10.
Road
Maintenance
Component
Subproject
Selection. The RHD shall ensure that the selection of roads
for inclusion in the RMC shall be carried out annually, subject
to criteria agreed with the Bank and subject to Bank
approval.
11.
Access Control. The government will ensure that
access control for the Chittagong Port access road is in
accordance with the amended legislation, rules, and
regulations for enabling and enforcing access control.
12.
The government will ensure that the RHD monitors
the effect of access control measures applied to the Kumira
bypass of the DhakaChittagong Highway and submits an
evaluation report to ADB not later than 3 years after the
physical completion of the bypass.
13.
Within 18 months of loan effectiveness, the
government will enact amendments to the MVO satisfactory
to ADB to enable enforcement of the traffic and
encroachment rules established under the Highways Act.
14.
Private Sector Participation. Within 18 months of
loan effectiveness, the government will amend and approve
a policy and guidelines for private investment in highway
projects in Bangladesh, in form and substance satisfactory to
ADB.
15.
Within 3 years of loan effectiveness, the government
will enact legislation and establish a regulatory framework
satisfactory to ADB, in accordance with the governments
approved Policy and Guidelines for Private Investment in
Highway Projects.
16.
Within 6 years of the effective date, an expert
working group, consisting of representatives of the
borrower, the private sector, and NGOs, with composition
and under terms of reference satisfactory to the Bank, shall
have completed and submitted recommendations to the
borrower on the feasibility of transferring the Chittagong
Port access road to private ownership.
17.
The borrower shall ensure that the operation and
maintenance of the Chittagong Port access road shall be in
accordance with concession to a private sector company on
the basis of international competitive bidding procedures
acceptable to the Bank.
Environment
1.
The government will ensure that all environmental
mitigation measures identified in the SEIA are incorporated
into the project design and followed during project
construction and O&M, in consultation with DOE and in
accordance with ADBs environmental guidelines and the
environmental monitoring plan agreed upon with ADB.
Social
1.
The government will ensure that the LARP agreed
upon with ADB, other relevant authorities, and the persons
affected by the project is implemented by the RHD through
an agency under arrangements in the involuntary
resettlement and ADBs Handbook on Resettlement (1998, as
amended from time to time).
2.
The borrower shall ensure that all counterpart
Reference in Loan
Agreement
Complied with
Complied with
Complied with
Complied with
Schedule 6, para. 4
Schedule 6, para. 5
Complied with. The

government policy on
private sector
participation has been
approved.
Complied with
Schedule 6, para. 6
Complied with
Schedule 6, para. 7
Complied with
Complied with. An
environmental
compliance review
mission noted several
mitigation issues, which
were then implemented.
Complied with
Complied
Covenants
Covenant
funding required for the project is in accordance with the
financing plan, including the cost of land acquisition, other
resettlement compensation, and implementation and
monitoring under the LARP utility relocation. General project
management expenses shall be fully provided for through
approved ADP allocations from FY2001/2002 for each fiscal
year to project completion.
Financial
1.
Cofinancing. Within 9 months of the effective date,
or at a later date as the Bank may otherwise agree, the
borrower shall have obtained the DFID grant or shall have
made other arrangements, satisfactory to the Bank, to find
the amount intended to be provided by the DFID grant.
Others
1.
Established, Staffed, and Operating PMU/PIU.
Project Performance Monitoring System. The RHD shall
establish capacity for and undertake a PPMS through an
initial sample survey to establish a baseline for subsequent
performance monitoring and annual surveys, including data
sufficient to meet the project management need for
feedback on implementation status and early warning of
impending situations that may jeopardize development
objectives.
2.
Fielding Consultants. The selection, engagement,
and services of the consultants shall be subject to the
provisions of this schedule and of the Guidelines on the Use
of Consultants by ADB and its Borrowers (October 1998, as
amended from time to time), which have been furnished to
the borrower and the RHD, and other arrangements
satisfactory to the Bank
3.
Project Implementation. The RHD shall ensure that
the Office of the Additional Chief Engineer (ADB Projects) is
responsible for all components. The RHD shall also ensure
that this office is headed at all times by a project director
who is the Additional Chief Engineer (ADB Projects)
4.
For the CIC, the RHD shall ensure that the project
director is assisted by (a) an additional project director, who
is a superintendent engineer and who is, inter alia,
responsible for implementation of the LARP; and (b) three
project managers, who are executive engineers and are
responsible for day-to-day implementation of the project.
5.
For the RMC, the RHD shall ensure that the project
director shall, inter alia, be responsible for the oversight of
subproject selection under the ARMP using HDM,
procurement, monitoring, and project coordination, with
day-to-day implementation being delegated to RHD zonal
offices, through Zonal Additional Chief Engineers.
6.
Without limiting the generality of section 4.06, the
borrower shall furnish to the Bank, no later than 6 months
after the end of each fiscal year, audited accounts and
related financial statements for the project, by a reputable
private external accounting firm acceptable to the Bank. The
same accounting firm shall also concurrently undertake
independent performance audits on all procurement-related
activity and furnish the results of such audits to the Bank no
later than 9 months after the end of the fiscal year. Such
Reference in Loan
Agreement
Complied with. DFID

financed the TA for
preparation of the land
transport policy, road
fund program, and
financial management.
PCR: Partly complied

with. No adequate
monitoring on poverty
and performance
indicators set out at
appraisal.
IED: No baseline report
was ever provided.
Complied with
Schedule 6, para. 1
Complied with
Schedule 6, para. 2
Complied with
Schedule 6, para. 3
Complied with

Financial audits
acceptable to ADB were
conducted annually, and
performance audits were
also started.
27
28
Appendix 3
Covenant
performance audits shall be undertaken twice during the
duration of the project. The firm shall be engaged in
accordance with terms of reference acceptable to the Bank.
Reference in Loan
Agreement
ADB = Asian Development Bank, ADP = annual development plan, ARMP = annual road maintenance plan, CIC = corridor
improvement component, DFID = Department for International Development of the United Kingdom, DOE = Department of
Environment, FY = fiscal year, HDM = highway development and management, IED = Independent Evaluation Department, LARP
= land acquisition and resettlement plan, LGED = local government engineering department, MVO = Motor Vehicles Ordinance,
NGO = nongovernment organization, O&M = operations and maintenance, PCR = project completion report, PIU = project
implementation unit, PMU = project management unit, PPMS = project performance monitoring system, RB = revenue budget,
RHD = Roads and Highways Department, RMC = road maintenance component, SEIA = summary of environmental impact
study, TA = technical assistance.
APPENDIX 4: POLICIES
Road Sector Policy Matrix
Subject
Policy Developments
1. Road Maintenance
1.1. National Land
Within the national land transport policy, provide overall direction
Transport Policy with regard to road maintenance, including that (i) since most of the
road network has been built, maintaining it in future will be the major
task of the RHD, and account for the majority of its expenditure; (ii)
the RHD will be responsible for maintaining primary and regional
roads with a limited number of feeder roads, while the LGED will be
responsible for rural roads and most feeder roads; and (iii) all RHD
road maintenance expenditure will be determined annually on the
basis of the highway design and maintenance model ranking of road
maintenance priorities in the annual road maintenance plan.
1.2. Budgeting
In the government budget, allocations for road maintenance need to

be (i) made distinct from those for road development, reconstruction,
and upgrading; (ii) over the medium term, budgeted on the basis of
all periodic maintenance under the annual development plan,
including those domestically funded and aid supported being
separately identified and determined through the annual road
maintenance plan; and (iii) over the longer term, when the existing
Requirement
Actually Achieved
The government must approve a

policy statement that all RHD
road maintenance expenditure
will be determined annually on
the basis of the HDM-4 model
ranking of road maintenance
priorities in the annual road
maintenance plan.
Completed. The
government approved the
national land transport
policy on 24 April
2004. The maintenance
expenditure was estimated
using the HDM-4 model
and was undertaken within
the annual road
maintenance plan.
Policy development must be

supported by the project,
including consulting services for
a nationally owned policy
development process involving
all main stakeholders, beginning
with a preliminary workshop to
discuss a first set of proposals
attended by relevant
government institutions, aid
agencies (including ADB, DFID,
and the World Bank),
academics, and NGOs, leading
to an agreed-upon policy
development process that is
expected to include further
review, analysis, and
consultation, which in turn will
lead to the governments
adoption of the policy.
Consulting services must review
and identify maintenance and
development expenditures
within the annual development
plan and revenue budget and
assist in establishing improved
budget headings for these
Completed
30
1.3. Maintenance
Institutions
1.4. Maintenance
Financing
Policy Developments
maintenance backlog has been reduced, shifted from the annual
development plan to the revenue budget to reflect the recurrent
nature of maintenance expenditures.
Strengthen organizational arrangements within the RHD with respect

to all aspects of maintenance of RHD roads to support effective
overall management of the annual road maintenance plan,
maintenance planning, analysis, budgeting, programming, design,
implementation, and monitoring.
Establish additional sources of road maintenance financing capable of
ensuring that the annual road maintenance plan can eventually be
fully financed from domestic sources on a sustainable basis.
2. Private Participation
2.1. Policy and Legal Establish policy and legal framework for private sector investment in
Framework
road projects, including the operation of toll roads and conducting
maintenance on a concession basis.
Requirement
Actually Achieved
items.
The government must ensure
consolidation of all expenditure
for periodic maintenance in the
annual development plan, and
this must be continued for at
least the next 5 years.
Completed
The government must complete

studies and implement budget
reclassification.
Completed
The government must commit

to shifting maintenance under
the annual development plan to
an expanded revenue budget
within a stipulated period.
To be addressed through the
DFID-funded institutional
development component.
Not completed
With support from ADB, DFID,

and the World Bank, carry out a
national review of options for
sustainable funding of the
annual road maintenance plan,
with options to include
establishing a road fund and
funding the full costs of the
plan directly under the
government budget, and
develop and implement an
action plan for introducing a
sustainable funding mechanism.
Review completed, but

road fund not established
Reactivate government
consideration of 1998 draft
policy and guidelines for private
investment in highways projects
Completed. Policy
approved in March 2005.
Ongoing
Appendix 4
Subject
Subject
3. Access Control
3.1. Legal
Framework
Policy Developments
Establish legal provision for introduction and enforcement of

controlled-access highways. Provisions include (i) avoidance of
encroachment of the right-of-way by markets, bus stops, and business
frontage and driveways; and (ii) restricting slow-moving traffic, such
as three wheelers, bicycles, and farm animals.
Requirement
in Bangladesh, and obtain
government approval for a
policy and guidelines
satisfactory to ADB.
Actually Achieved
With ADB support, amend law

to reflect adopted policy and
guidelines for private investment
in highways.
As no private operator was

in place to operate the toll
road, ADB approved on 4
February 2007 a contractor
to undertake a 1-year
contract on toll collection
and O&M for the
Chittagong Port access
road.
With ADB support, introduce

rule under the Highways Act
and regulation under the Motor
Vehicles Ordinance, and amend
the ordinance.
Completed
ADB = Asian Development Bank, DFID = Department for International Development of the United Kingdom, HDM = highway development and management, LGED = local
government engineering department, NGO = nongovernment organizations, O&M = operation and maintenance, RHD = Roads and Highways Department.
Policies
31
APPENDIX 5: ECONOMIC REEVALUATION

1.
The economic reevaluation for the project was undertaken for both components, the corridor
improvement component (CIC) and the road maintenance component (RMC), as well as for each
subsection per component. The with- and without-project situations were compared to determine
the effects of introducing the project roads. The projects main economic benefits consisted of
savings in vehicle-operating costs (VOCs) and time. The methodology used in this reevaluation was the
same used at appraisal and the project completion report (PCR).
2.
The CIC consisted of three parts: (i) overlay and widening of the Chandina, Comilla, and Feni
bypasses; (ii) upgrading and widening of the FeniChittagong section, including construction of
local bypasses; and (iii) construction of the Chittagong Port access road (CPAR), an access-controlled
toll road.
3.
The RMC financed a 3-year period of priority road maintenance from the annual road
maintenance plan. At completion, periodic maintenance work was undertaken on the thirteen
sections, which were selected according to Asian Development Bank (ADB) criteria. These sections
were: (i) DaudkandiChandina bypass, (ii) ChandinaComilla bypass, (iii) ComillaFeni bypass, (iv)
ComillaChandpur, (v) LaxmipurRaipur, (vi) RaipurChandpur, (vii) LalmaiLakshamSonaimuri, (viii)
BegumgonjMaijdiSonapur, (ix) ChittagongCoxs Bazar, (x) Coxs BazarTeknaf, (xi) MiaBazar
KashinagarHarischar, (xii) MaidjiUderhat, and (xiii) KalurghatManashertek.1 Of the 13 sections, the
first ten were included in the economic recalculation for the RMC, since traffic counts for the last three
sections were not available to the project performance evaluation report (PPER) team.
4.
The reevaluated economic internal rate of return (EIRR) for the CIC considered the economic
costs and benefits over the construction period plus 20 years of operation
as at appraisal. The
RMC considered the economic costs and benefits over the construction period plus 10 years of
operation as at appraisal. All costs and benefits were expressed in 2008 constant prices. The
methodology for calculating the EIRR used the highway and design maintenance (HDM) model as at
appraisal.
5.
In re-estimating project benefits, the PPER team employed updated information, especially
traffic data. The PPER team collected data on the available classified traffic counts for each road
section, the road condition survey conducted during the PPER mission, and 20042005 VOCs. The HDM
Circle of the Roads and Highways Department (RHD) collects and consolidates data on vehicle traffic
counts, road conditions, and VOCs on a periodic basis, as part of its mandate in preparing the annual
road maintenance (routine and periodic) and rehabilitation requirements for the national, regional, and
local roads in its database. The latest traffic count data available on project relevant road sections was
for 2011. However, the availability of traffic counts on relevant road sections was inconsistent. The
HDM Circle provided the PPER mission with available average annual daily traffic (AADT) estimates
based on traffic count data for 2004, 2006, 2007, 2008, 2009, and 2011 for national roads and 2004,
2007, 2008, and 2011 for regional roads.
6.
The AADT data provided showed increasing and decreasing trends in traffic flows. Using AADT
data from 2004 to 2011, it was not possible to determine a stable growth rate for each project road
section. A traffic forecast was prepared using traffic growth rates by vehicle type estimated in the PCR.
These were higher than those used at appraisal, although the methodology used was the same,
including the assumptions made.2
1
Road sections implemented under the RMC were to be selected according to ADB criteria, one of which was that the
economic internal rate of return (EIRR) be at least 20% based on a minimum 10-year evaluation period.
GDP growth assumption from 2010 onward was 5% and elasticity of demand for transport was 1.5 for both passenger and
freight traffic. The appraisal growth rate estimates were lower than those used in the PCR, but resulted in high traffic forecasts
as compared to actual traffic due to the higher baseline traffic used. The traffic growth rate estimates in the PCR are higher
33
7.
The actual growth in the number of vehicles in Bangladesh has been very robust at 12% for the
20072010 period and 9% for the 20022010 period. Table A5.1 gives the vehicle registration statistics
from 2002 to 2010, including the estimated growth rate per vehicle type. The traffic growth rates used
are given in Table A5.2, which was also used for the RMC traffic forecast.
Table A5.1: Vehicle Registration Statistics 20022010
Vehicle Type
Bus/Minibus
Microbus
Trucks
Jeep
Car
Auto
Rickshaw
Motorcycle
Total
200203
31,848
16,244
50,786
11,009
66,393
84,693
200304
33,302
17,359
52,951
11,172
69,461
94,120
200405
34,388
18,826
55,082
11,386
72,254
99,930
200506
35,349
20,998
57,399
11,704
75,728
104,432
200607
36,526
23,637
59,674
12,090
80,453
111,046
200708
37,906
26,484
61,717
12,506
87,142
122,092
200809
39,088
30,056
65,064
13,028
96,137
135,875
200910
40,059
34,148
71,424
13,625
106,291
148,982
239,884
500,857
257,086
535,451
281,599
573,465
316,847
622,457
366,031
689,457
433,287
781,134
501,825
881,073
567,553
982,082
200710a
2.8%
13.6%
7.6%
4.4%
10.4%
200210b
2.9%
9.7%
4.4%
2.7%
6.1%
10.5%
14.4%
12.1%
7.3%
11.4%
8.8%
Notes: a = growth rates

b = growth rates
Source: Statistical Yearbook of Bangladesh 2010, Bangladesh Bureau of Statistics.
Table A5.2: Traffic Growth Rates (%)

Vehicle Type
Motorcycle
Auto Rickshaw
Cars
Trucks
Buses
20072011
PCR & PPER
Appraisal
7.0%
7.0%
9.0%
6.0%
9.0%
6.0%
9.0%
6.0%
20122016
PCR & PPER
Appraisal
6.6%
6.6%
7.5%
5.0%
7.5%
5.0%
7.5%
5.0%
2017 onward
PCR & PPER
Appraisal
6.6%
6.6%
7.5%
5.0%
7.5%
5.0%
7.5%
5.0%
PCR = project completion report, PPER = project performance evaluation report.

Source: Asian Development Bank database.
8.
The PPER traffic forecast for the CPAR utilized the traffic data collected by the toll road operator
from 2007 to October 2012. The 2012 traffic was used as baseline data for the PPER forecast and the
traffic growth rates as given in Table A5.2 were applied.
9.
The RHD is currently undertaking the four-laning work of the DhakaChittagong Highway,
totaling 192.30 kilometers (km). This four-laning work involves the construction of 28 bridges,
including five major bridges, three flyovers over the railway lines, and two underpasses. The project is
funded by the Government of Bangladesh/Japan Debt Cancellation Fund of about Tk 31,836 million. At
completion of the four-laning work (expected in 2013), the entire DhakaChittagong Highway will be
four lanes. In addition, the existing two lanes will be overlaid to match the road conditions of the two
new lanes. Under the existing contracts for the four-laning, the contractors have been responsible for
the routine maintenance of the existing highway since the start of the project. This four-laning work is
affecting the CIC and RMC subprojects located on the DhakaChittagong Highway:
Corridor Improvement Component
(i)
Chandina, Comilla, and Feni bypasses
(ii)
FeniChittagong section
Road Maintenance Component
(i)
DaudkandiChandina bypass
(ii)
End of Chandina bypassstart of Comilla bypass
but used lower baseline traffic, resulting in lower traffic forecasts. Using the PCR growth rate estimates, the resulting PPER
traffic forecast was lower since the 2011 actual traffic was lower.
34
Appendix 5
(iii)
End of Comilla bypassstart of Feni bypass
10.
The four-laning work is expected to be completed by the end of 2013. For a conservative
estimation, the PPER team adjusted the traffic forecast downward for the abovementioned road
sections by 50% from 2014 onward, considering that vehicle traffic will utilize four lanes (or two lanes
in each direction). The revised traffic forecasts along the CIC, including the CPAR, are given in Table
A5.3.
Table A5.3: Traffic Forecast for CIC Road Sections, Including CPAR, 2004, 2009, 2014, and 2019 Appraisal and PPER Estimates
Car
1,801
1,136
2,598
1,113
3,444
711
4,449
1,021
Utility
Micro
bus
Mini
bus
Large
Bus
Small
Truck
Medium
Truck
Heavy
Truck
Total
Total
- All Traffic
845
1,218
1,218
1,669
1,615
855
2,087
1,227
1,208
1,884
1,742
233
2,309
816
2,983
1,172
1,756
2,704
2,532
2,736
3,357
1,433
4,337
2,057
716
837
1,032
664
1,368
1,189
1,767
1,708
4,408
5,112
6,357
6,923
8,427
4,182
10,887
6,003
106
660
153
300
202
231
261
332
10,840
14,570
15,632
13,887
20,722
10,050
26,771
14,428
10,840
16,773
15,632
18,709
20,722
14,125
26,771
20,037
1,746
1,456
2,517
1,465
3,337
788
4,311
1,132
1,190
579
1,716
882
2,275
777
2,939
1,115
2,856
1,484
4,119
2,226
5,460
884
7,055
1,269
714
323
1,030
591
1,365
798
1,764
1,145
6,462
6,562
9,319
8,682
12,353
4,491
15,959
6,447
397
462
572
1,014
758
482
980
692
17,062
11,720
24,605
16,414
32,616
9,215
42,140
13,229
17,062
15,272
24,605
23,111
32,616
12,895
42,140
18,294
1,190
830
1,716
1,639
2,275
540
2,939
776
1,227
1,336
1,769
809
2,345
338
3,030
485
2,988
385
4,309
364
5,712
383
7,380
549
714
538
1,030
633
1,365
411
1,764
591
7,062
1,712
10,184
1,215
13,499
546
17,441
783
514
20
742
23
983
20
1,270
28
16,985
5,718
24,494
5,439
32,468
3,276
41,949
4,703
16,985
7,769
24,494
12,017
32,468
6,982
41,949
9,805
353
189
294
141
209
4,786
226
6,198
509
604
674
958
871
1,376
273
424
203
362
562
270
467
726
348
302
9
400
9
517
13
6,903
37
9,150
50
11,822
72
329
1,766
436
2,560
563
3,675
8,943
2,416
11,854
3,578
15,314
5,136
6,198
8,943
2,763
11,854
3,959
15,314
5,661
3,697
489
5,332
1,170
7,068
837
9,132
1,202
3,290
488
4,744
576
6,289
836
8,125
1,200
1,019
249
633
908
365
384
158
226
409
180
203
291
CIC = corridor improvement component, CPAR = Chittagong Port access road, PPER = project performance evaluation report.
Source: Bangladesh Roads and Highways Department database.
Economic Revaluation
Auto
Year
Source
Motorcycle
Rickshaw
A. Chandina, Comilla, and Feni Bypasses
2004 Appraisal
PPER
993
1,210
2009 Appraisal
PPER
1,165
3,657
2014 Appraisal
PPER
571
3,504
2019 Appraisal
PPER
785
4,824
B. FeniMirsari Section of FeniChittagong
2004 Appraisal
PPER
227
3,325
2009 Appraisal
PPER
866
5,831
2014 Appraisal
PPER
607
3,073
2019 Appraisal
PPER
836
4,230
C. SitakundaChittagong Section of Feni Chittagong
2004 Appraisal
PPER
587
1,464
2009 Appraisal
PPER
692
5,886
2014 Appraisal
PPER
564
3,142
2019 Appraisal
PPER
777
4,325
D. Chittagong Port Access Road
2004 Appraisal
PPER
2009 Appraisal
PPER
347
2014 Appraisal
PPER
381
2019 Appraisal
PPER
525
35
36
Appendix 5
11.
The appraisal and PCR did not have traffic forecasts for the RMC roads. The actual roads
covered under the RMC were different from those identified at appraisal. The PCR also did not give the
traffic forecasts for the RMC subprojects, although an economic evaluation was prepared. The PPER
prepared traffic forecasts for the RMC subprojects, for which traffic counts were obtained from the
RHD. These are shown in Table A5.4.
Table A5.4: Traffic Forecast in AADT for RMC Road Sections (2004, 2009, 2012, 2019 and 2027)
MotorAuto
Year
cycle
Rickshaw
DaudkandiChandina Bypass
2004
127
354
2009
261
1,356
Large
Bus
Small
Truck
Medium
Truck
Heavy
Truck
Total
1,176
655
2,654
2,597
570
773
3,441
5,635
163
300
9,961
15,139
321
2,317
837
3,317
987
7,197
383
19,244
264
1,906
688
2,728
812
5,920
315
15,750
470
3,399
1,227
4,866
1,448
10,558
562
27,910
1,13
6
1,11
3
1,24
2
1,02
1
1,82
2
1,019
1,218
1,884
2,704
837
5,112
660
16,773
249
1,669
233
2,736
664
6,923
300
18,709
1,104
1,492
1,424
2,500
2,076
7,298
403
24,712
908
1,227
1,172
2,057
1,708
6,003
332
20,037
1,620
2,189
2,090
3,668
3,045
10,707
591
35,085
904
1,056
1,289
1,008
1,681
775
287
367
302
538
654
72
92
76
135
865
422
539
443
791
1,411
180
230
189
337
2,804
811
1,036
852
1,520
460
298
381
313
558
6,433
2,858
3,650
3,003
5,355
223
189
241
199
354
15,142
6,408
8,111
6,608
11,643
1,333
3,761
4,590
3,590
5,986
400
570
728
599
1,06
8
392
14
18
15
27
491
649
828
681
1,215
963
663
846
696
1,242
951
1,161
1,483
1,220
2,175
537
414
529
435
776
1,162
618
789
649
1,158
148
-
7,431
8,341
10,412
8,354
14,429
519
1,820
6,844
10,705
90
236
612
1,00
6
1,79
5
142
75
164
271
112
249
632
1,040
405
280
801
1,318
336
336
777
1,279
202
254
1,188
1,954
224
612
1,285
2,113
70
-
2,620
4,395
13,124
20,971
483
1,855
2,350
2,280
3,485
3,769
36,011
29
244
121
200
356
65
57
135
223
397
28
184
216
355
634
145
223
1,087
1,788
3,189
87
205
861
1,417
2,526
86
236
1,289
2,120
3,782
139
622
1,518
2,497
4,454
68
-
1,651
3,743
10,313
16,554
28,601
273
288
250
219
516
328
915
23
3,242
2019
249
1,294
2027
415
2,158
ChandinaComilla Bypass
2004
993
1,210
2009
1,165
3,657
2012
1,004
6,168
2019
785
4,824
2027
1,310
8,044
2,144
Mini
bus
602
1,814
1,655
2027
Micro
bus
388
251
319
LaxmipurRaipur
2004
520
2009
532
2012
822
2019
1,286
Utility
486
1,49
7
1,91
2
1,57
3
2,80
5
2012
ComillaFeni Bypass
2004
613
2009
235
2012
287
2019
224
2027
374
ComillaChandpur
2004
1,054
2009
491
2012
599
2019
469
2027
782
Car
17,850
RaipurChandpur
2004
495
509
2009
678
1,293
2012
1,125
3,960
2019
1,759
6,195
2027
2,933
10,329
LalmaiLakshamSonaimuri
2004
217
213
Year
2009
2012
2019
2027
Motorcycle
236
152
238
398
Auto
Rickshaw
1,572
1,326
2,074
3,459
BegumgonjMaijdiSonapur
2004
412
1,002
2009
570
1,044
2012
696
1,275
2019
1,089
1,994
2027
1,815
3,324
ChittagongCoxs Bazar
2004
220
291
2009
643
708
2012
447
1,387
2019
699
2,169
2027
1,165
3,617
Coxs BazarTeknaf
2004
128
837
2009
896
1344
2012
603
695
2019
944
1,087
2027
1,574
1,813
Car
255
356
585
1,04
4
Utility
5
148
244
435
Micro
bus
340
434
714
1,274
Mini
bus
338
395
649
1,158
Large
Bus
682
675
1,111
1,981
Small
Truck
389
705
1,160
2,069
Medium
Truck
581
849
1,397
2,492
Heavy
Truck
-
Total
4,399
5,041
8,174
14,309
167
251
320
527
939
192
370
472
776
1,385
229
370
472
776
1,385
335
615
785
1,292
2,304
668
533
681
1,120
1,997
266
477
610
1,003
1,789
596
471
601
989
1,765
36
7
8
14
25
3,903
4,707
5,920
9,580
16,728
93
211
311
511
912
218
453
205
338
602
438
1,052
943
1,551
2,766
254
286
599
985
1,757
430
604
560
921
1,643
150
374
907
1,493
2,662
422
823
1,421
2,338
4,170
28
19
35
58
104
2,544
5,173
6,815
11,063
19,399
61
38
223
366
653
97
294
396
651
1,161
658
507
350
577
1,028
73
456
211
347
618
155
33
217
357
637
148
43
381
626
1,117
302
195
413
679
1,211
3
-
2,459
3,809
3,488
5,634
9,812
37
AADT = average annual daily traffic, HDM = highway development and management, RHD = Roads and Highways Department,
RMC = road maintenance component.
Note: AADT data for 2004, 2009, and 2011 (baseline) were from HDM Circle, RHD. AADT for 2012, 2019, and 2027 were estimated
using 2011 as baseline and growth rate as given in Table A5.2.
Source: Roads and Highways Department database. Bangladesh.
12.
The 20042005 VOC inputs to the HDM-4 model were provided by the HDM Circle. The
resulting VOC per km estimate by vehicle type and road condition was used to estimate VOC savings by
vehicle type. For the CIC roads, except for CPAR, the computed VOC and VOC savings per km by vehicle
type assumed an international roughness index (IRI) of 6 for without-, and 2 for with-project situation.
For the CPAR, aside from the difference in road condition (IRI values of 4 for the without-project
situation and 2 for the with-project situation), the without-project situation assumed a road length of
20 km (road to the port via the internal city road) compared to the with-project situation of a shorter
route of 13.58 km or a difference of 6.42 km. 1 The computed VOC by road condition and IRI is shown
in Table A5.5.
Table A5.5: Economic Vehicle Operating Cost per km, by IRI Value and Vehicle Type, in Taka/km
IRI
IRI 6
IRI 2
Road Condition
Without Project
With Project
Motorcycle
2.57
2.35
Auto
Rickshaw
2.57
2.35
Car
9.46
8.62
Utility
18.98
16.69
Micro
bus
11.70
10.49
Mini
bus
12.30
11.25
Large
Bus
19.38
17.49
Small
Truck
10.25
9.11
Medium
Truck
16.09
14.39
HDM = highway development and management, IRI = international roughness index, PPER = project performance evaluation report, RHD
= Roads and Highways Department.
Source: PPER estimates using HDM-4. Basic 20042005 operating cost data were provided by RHDs HDM Circle, 2012.
HDM-4 estimates the VOC based, on among other factors, the road condition as expressed in IRI values indicated below:
Paved Roads Roughness (IRI, m/km)
Road Condition
Primary Roads
Secondary Roads
Tertiary Roads
Good
2
3
4
Fair
4
5
6
Poor
6
7
8
Bad
8
9
10
Source: HDM-4 software guide.
Heavy
Truck
24.75
23.46
38
Appendix 5
13.
The estimate of the projects actual economic costs was based on the actual financial costs for
civil works, land acquisition and resettlement, design and construction supervision, and project
administration. Land acquisition and resettlement costs were allocated only to CIC subprojects, while
design and construction supervision and project administration were allocated to both CIC and RMC
projects. Interest costs during construction were not considered an economic cost. Based on PCR
estimates of economic costs, it was calculated that economic costs comprise about 80% of financial
costs. This calculation was used to adjust the financial costs of CIC and RMC subprojects to economic
costs. Since data on the actual cost incurred per year for each subproject were not available, the actual
implementation periods for the CIC and RMC contracts were used to distribute the costs over the
implementation period of each subproject under a specific contract.
14.
The routine and periodic maintenance costs for each subproject were included as part of the
subproject maintenance cost and estimated using 2004 prices at Tk 40,000 per km, although the fourlaning contract for the DhakaChittagong Highway included the routine maintenance of said highway
inclusive of the CIC and RMC subprojects on the alignment. The periodic maintenance costs for the
subprojects on the DhakaChittagong Highway were advanced to 2013 instead of the planned 2016
overlay. The routine maintenance cost for the CPAR was already included in the contract price of the
toll collector and the periodic maintenance cost was assumed, as in the PCR, to be undertaken in 2016.
For the RMC projects outside of the DhakaChittagong Highway and ChittagongTeknaf road, the
periodic maintenance cost was assumed to be undertaken in 2018. The RHD had scheduled the overlay
of the ChittagongTeknaf road for 2013. The estimated periodic maintenance cost at 2004 prices was
estimated at Tk 3.52 million/km.
15.
The EIRR was estimated based on the subproject cost and benefit streams. The bulk of the
projects costs were incurred in 20032006 for the CIC and in 20052007 for the RMC.
16.
The recalculated EIRR for the CIC subprojects, taken as one component, was 17.1% (see Table
A5.6). The recalculated EIRRs for each CIC subproject are given in Table A5.7:
Table A5.6: Recalculation of EIRR for Total Corridor Improvement Component
(Tk million, 2004 prices)
Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Capital
Cost
385.54
1,293.31
983.25
1,437.17
1,106.37
377.65
72.65
Maintenance
Cost
4.53
4.53
4.53
4.53
4.53
4.53
4.53
4.53
52.29
4.53
4.53
4.53
4.53
4.53
4.53
4.53
4.53
4.53
Total Cost
385.54
1,293.31
983.25
1,437.17
1,106.37
377.65
77.18
4.53
4.53
4.53
4.53
4.53
4.53
4.53
52.29
4.53
4.53
4.53
4.53
4.53
4.53
4.53
4.53
4.53
VOC Savings
823.54
964.75
1,209.50
1,171.53
1,209.90
1,316.91
1,414.92
839.85
902.39
969.60
1,041.82
1,119.42
1,202.81
1,292.41
1,388.69
1,492.15
1,603.32
1,722.79
1,851.16
Travel Time
Savings
155.21
179.38
189.66
185.53
194.82
209.34
224.79
120.99
129.92
139.52
149.82
160.88
172.76
185.53
199.23
213.95
229.76
246.74
264.98
Total Benefits
978.75
1,144.13
1,399.16
1,357.05
1,404.72
1,526.25
1,639.71
960.84
1,032.32
1,109.12
1,191.64
1,280.30
1,375.57
1,477.93
1,587.92
1,706.10
1,833.08
1,969.53
2,116.13
Net Benefits
(385.54)
(1,293.31)
(983.25)
(1,437.17)
(1,106.37)
601.10
1,066.95
1,394.63
1,352.52
1,400.19
1,521.72
1,635.18
956.30
1,027.78
1,056.82
1,187.10
1,275.77
1,371.04
1,473.40
1,583.39
1,701.57
1,828.55
1,964.99
2,111.60
Year
2026
2027
Capital
Cost
Maintenance
Cost
4.53
4.53
Total Cost
4.53
4.53
VOC Savings
1,989.10
2,137.33
Travel Time
Savings
284.56
305.60
Total Benefits
2,273.66
2,442.93
EIRR
NPV
Net Benefits
2,269.13
2,438.40
17.1%
$2,513.19
EIRR = economic internal rate of return, NPV = net present value, VOC = vehicle operating costs.
Source: Reports and recommendations of the President, project completion reports, and project performance evaluation report
calculations.
Table A5.7: Results of EIRR Recalculation for CIC, Appraisal, PCR, and PPER (in %)
Description
Widening of Chandina, Comilla, and Feni bypasses
FeniMirsarai section of FeniChittagong
SitakundaChittagong section of FeniChittagong
Chittagong Port access road
All CIC subprojects
Length
(in km)
51.76
25.44
22.46
13.58
113.24
Economic Internal Rate of Return

Appraisal
PCR
PPER
35.9%
36.9%
26.6%
31.1%
46.5%
29.4%
15.9%
15.4%
13.1%
12.2%
37.0%
28.6%
17.1%
CIC = corridor improvement component, EIRR = economic internal rate of return, km = kilometer, PCR = project completion
report, PPER = project performance evaluation report.
Source: Reports and recommendations of the President, project completion reports, and project performance evaluation report
calculations.
17.
Of the 13 subprojects, the recalculated EIRR for the RMC subprojects excluded the MiaBazar
KashinagarHarischar, MaidjiUderhat, and KalurghatManashertek roads, for which traffic counts
were not available. The PCR did not recalculate the EIRR for the RMC projects as a whole. For the 11
subprojects in the RMC, the EIRR was 17.4% (see Table A5.8). The recalculated EIRRs for each RMC
subproject are given in Table A5.9.
Table A5.8: Recalculation of EIRR for Total Road Maintenance Component
(Tk million, 2004 prices)
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Capital
Cost
568.09
568.09
568.09
Maintenance
Cost
16.03
16.03
16.03
16.03
16.03
141.43
77.08
16.03
16.03
16.03
358.42
16.03
16.03
16.03
16.03
16.03
16.03
16.03
16.03
16.03
Total
Cost
568.09
568.09
568.09
16.03
16.03
16.03
16.03
16.03
141.43
77.08
16.03
16.03
16.03
358.42
16.03
16.03
16.03
16.03
16.03
16.03
16.03
16.03
16.03
VOC
Savings
310.14
314.46
348.40
399.90
429.68
461.68
334.00
358.86
385.57
414.27
445.11
478.25
513.85
552.11
593.22
637.39
684.85
735.86
790.66
849.54
Travel Time
Savings
4.93
5.39
6.02
7.19
7.72
8.29
6.43
6.91
7.42
7.97
8.55
9.19
9.86
10.59
11.37
12.21
13.12
14.09
15.13
16.24
EIRR = economic internal rate of return, VOC = vehicle operating costs.

Source: Project completion reports, and project performance evaluation report calculations.
Total
Benefits
315.07
319.84
354.42
407.08
437.40
469.97
340.44
365.77
392.99
422.24
453.67
487.43
523.72
562.70
604.59
649.61
697.97
749.94
805.78
865.79
EIRR
Net
Benefits
(568.09)
(568.09)
(568.09)
299.04
303.81
338.39
391.05
421.37
328.53
263.36
349.74
376.96
406.21
95.25
471.40
507.69
546.67
588.56
633.58
681.94
733.91
789.75
849.76
17.4%
39
40
Appendix 5
Table A5.9: Results of EIRR Recalculation for RMC, PCR, and PPER (in %)
EIRR
Length
Description
(in km)
PCR
PPER
DaudkandiChandina bypass
End of Chandina bypassstart of Comilla bypass
End of Comilla bypassstart of Feni bypass
ComillaChandpur
LaxmipurRaipur
RaipurChandpur
LalmaiLakshamSonaimuri
BagumgonjMaijdiSonapur
ChittagongCoxs Bazar
Coxs BazarTeknaf
All RMC
28.69
12.69
34.62
50.5
16
27
38
13.5
62.5
37
320.5
33%
30%
166%
62%
38%
56%
144%
93%
78%
15.1%
29.9%
13.4%
18.0%
20.5%
19.9%
15.1%
36.9%
20.2%
8.6%
17.4%
EIRR = economic internal rate of return, km = kilometer, PCR = project completion report, PPER = project
performance evaluation report, RMC = road maintenance component.
Source: Project completion reports, and project performance evaluation report calculations.
APPENDIX 6: FINANCIAL REEVALUATION

1.
The Chittagong Port access road (CPAR) was intended to provide a new express access road
between Chittagongs northern approaches and Chittagong Port, the primary and major international
port of Bangladesh. CPAR was originally intended as a build, operate, and transfer project, but the
estimated financial internal rate of return (FIRR) was too low to attract private sector participation.
Subsequently, it was transformed into the first limited-access toll road to be operated and maintained
by the private sector in Bangladesh.
2.
The subprojects FIRR was re-estimated using the latest traffic statistics available and compared
with the FIRRs estimated at appraisal and at project completion. The major assumptions used in
recalculating the FIRR were the following:
(i)
(ii)
(iii)
(iv)
Capital costs were comprised of actual capital expenditures incurred during the
construction of the CPAR, including civil works and equipment, but excluding interest
expenses during construction.
Operation and routine maintenance costs were based on the contracted cost as given
in the contract for operation of the CPAR between the government of Bangladesh and
the concessionaire, a joint venture of Monico Limited and Asian Traffic Technologies,
Ltd.
The periodic maintenance cost and year of implementation was as given in the project
completion report (PCR).
The toll collection revenues were based on actual traffic using the CPAR from 2007 to
October 2012 as provided by the concessionaire through the Roads and Highways
Department (RHD) office in Chittagong. The average annual daily traffic (AADT)
increased by 10.3% per annum from 2007 to 2012. In the appraisal report, the total
estimated AADT in 2009 was 8,942, while the actual AADT was only 2,763 or a
difference of 6,179 (69.1%) below the appraisal estimate. In the preparation of the
traffic forecast, the traffic growth rates used were the same as the estimated growth
rates by vehicle type given in the PCR. This was determined to be the most reasonable
estimate given that Chittagong Ports capacity utilization was reaching its design
levels.1 Table A6.1 gives the traffic growth rates used in the traffic forecast. Table A6.2
gives the actual AADT for the CPAR from 2007 to 2012 and Table A6.3 the traffic
forecast from 2013 to 2027 by vehicle toll class. The toll rates charged by vehicle class
are given in Table A6.4.
Table A6.1: Traffic Growth Rates Used for the CPAR, 20132027, in %
Vehicle Type
Motorcycle
Auto Rickshaw
Cars
Trucks
Buses
20122016
6.6
6.6
7.5
7.5
7.5
2017 onward
6.6
6.6
7.5
7.5
7.5
CPAR = Chittagong Port access road.

Source: Roads and Highways Department, Bangladesh.
The Study Design, Layout Plan, Costing, and Project Appraisal Report for Techno-Economic Feasibility Study of a Deep Sea Port
in Bangladesh, Pacific Consultants International (PCI), Japan, in association with AEC, Thailand, and DECON, JPZ & DEVCON,
Bangladesh, November 2008.
42
Appendix 6
Table A6.2: Actual and Forecast AADT for the CPAR by Vehicle Class per Toll Rate Charged
Actual AADT, 20072012
Class I
Year
2007
2008
2009
2010
2011
2012
a.g.r.
MC/AR
338
377
347
287
328
336
(0.14%)
Class II
Microbus/
Car
431
480
604
663
710
829
13.99%
Class III
Small
Truck
4
4
9
6
5
8
14.32%
Class IV
Medium
Truck
27
32
37
23
41
43
10.21%
Class V
Large
Truck
13
7
18
19
74
31
18.46%
Class VI
Heavy Truck/
Tanker
1,293
1,436
1,749
1,527
1,730
2,184
11.06%
Total
2,106
2,336
2,763
2,524
2,887
3,431
10.26%
AADT = average annual daily traffic, AR = auto rickshaw, CPAR = Chittagong Port access road, MC = motorcycle.
Note: a.g.r. = annual growth rate (estimate by the Independent Evaluation Department).
Source: Roads and Highways DepartmentChittagong, December 2012.
Table A6.3: AADT Forecast, 20132027

Class I
Year
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
MC/AR
338
377
347
287
328
336
358
381
407
433
462
493
525
560
597
636
678
723
770
821
875
Class II
Microbus/
Car
431
480
604
663
710
829
892
958
1,030
1,108
1,191
1,280
1,376
1,479
1,590
1,709
1,837
1,975
2,123
2,283
2,454
Class III
Small
Truck
4
4
9
6
5
8
8
9
10
10
11
12
13
14
15
16
17
19
20
21
23
Class IV
Medium
Truck
27
32
37
23
41
43
47
50
54
58
62
67
72
77
83
89
96
103
111
119
128
Class V
Large
Truck
13
7
18
19
74
31
33
36
39
42
45
48
52
55
60
64
69
74
80
86
92
Class VI
Heavy Truck/
Tanker
1,293
1,436
1,749
1,527
1,730
2,184
2,348
2,524
2,714
2,917
3,136
3,371
3,624
3,896
4,188
4,502
4,839
5,202
5,593
6,012
6,463
AADT = average annual daily traffic, AR = auto rickshaw, MC = motorcycle.

Table A6.4: Actual Toll Rates Charged by Vehicle Type

Vehicle Class
Category
I
II
III
IV
V
VI
Vehicle Description
Motorcycle, auto rickshaw, tempo
Microbus, car, pick-up
Small truck
Medium truck
Large truck, large bus
Heavy truck, tanker
Toll
(in Taka/Vehicle Class)
5
15
20
25
30
50
Source: Monico Limited and Asian Traffic Technologies, Ltd., December 2012.
Total
2,106
2,336
2,763
2,524
2,887
3,431
3,686
3,959
4,253
4,568
4,907
5,270
5,661
6,081
6,532
7,017
7,537
8,096
8,697
9,342
10,036
Financial Reevaluation
3.
The recomputed FIRR for the CPAR is -2.47%. This is lower than the appraisal estimate of 4.8%,
but higher than the PCR recomputation of -4.3%. The difference between the PPER recomputation and
the appraisal result can be attributed to the actual lower traffic used, which was 69.1% lower than
forecast. The base toll rates assumed at appraisal were also higher than the implemented toll rates.
Since the concessionaire is just collecting the tolls and undertaking routine maintenance of the road on
a fixed contract, it has no control over the toll rates, which the government sets. It was not possible to
trace the cause of the difference in the PCR results, since the PCR did not show the actual and forecast
traffic used. In analyzing the revenue streams for both the PCR and the Independent Evaluation
Department (IED), the PCR traffic forecast was lower than the actual traffic attained. For example, the
2012 PCR estimate of revenues was Tk 46.79 million, while the actual 2012 realized revenues totaled Tk
53.04 million or a difference of TK 6.25 million. Table A6.5 shows the details of the recomputation of
the CPAR FIRR.
Table A6.5: Recomputation of the CPAR Financial Internal Rate of Return
Year
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Capital
Cost
311.68
331.22
636.14
488.08
131.93
Operating &
Maintenance
Cost
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
Periodic
Maintenance
41.83
Total Cost
311.68
331.22
636.14
488.08
151.93
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
61.83
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
20.00
CPAR = Chittagong Port access road, FIRR = financial internal rate of return.
Toll
Revenues
31.28
34.68
42.24
37.52
42.99
53.04
57.02
61.29
65.88
70.81
76.12
81.82
87.95
94.53
101.62
109.23
117.41
126.20
135.66
145.82
156.74
FIRR
Net
Revenues
(311.68)
(331.22)
(636.14)
(488.08)
(120.65)
14.68
22.24
17.52
22.99
33.04
37.02
41.29
45.88
8.98
56.12
61.82
67.95
74.53
81.62
89.23
97.41
106.20
115.66
125.82
136.74
(2.47%)
43
APPENDIX 7: SOCIOECONOMIC REEVALUATION

1.
The socioeconomic evaluation used various instruments, including a household survey, focus
group discussions (FGDs), key informant interviews (KIIs), a survey of drivers and passengers, and
reviews of secondary data and information. Using structured questionnaires, the household survey was
conducted in the project areas to collect data on the socioeconomic situation that prevailed before and
after the completion of the project.
2.
The project roads, totaling 113.28 km between Comilla and Chittagong districts, intersect 97
mouzas located in 5 upazillas1 in 3 districts: Chandina and Comilla Sadar in Comilla District; Feni Sadar
in Feni District; and Mirsarai, Sitakunda, and Chittagong City Corporation in Chittagong District. 2 The
socioeconomic and poverty impact evaluation examined sample households residing not only along the
project roads, but within 2km of them. A total of 570 households were randomly selected for the
household surveys from the 27 mouzas (15 mouzas along the project roads and 12 mouzas within 2
km of them). The total number of sample households within 2 km of a project road is 50% of the
number of sample households from the mouzas along the project road.
Table A7.1: List of Selected Mouzas
District
Comilla
Upazilla
Chandina
Comilla Sadar
Feni
Feni Sadar
Chittagong
Mirsarai
Sitakunda
Sitakunda
Chittagong City
Sitakunda
Chittagong Sadar
Along the Project Road

Mouza Name
Number of HH
Tircho
162
Nautala
168
Keramkhal
107
Amtali
127
Lalbagh
117
Zerkachhar
59
Ilaspur
60
Jatrasiddhi
51
Purba Mayani
109
Dakshin Terail
131
Nayakhali
222
Bara Kumira
106
Ward 10
175
Uttar Salimpur
187
Ward 26
262
Within 2km of the Project Road

Mouza Name
Number of HH
Kashimpur
85
Asadnagar
96
Asrafpur
Chhota Gopalnagar
Safiabad
Madhuai
Mirganj
Chhota Kamaldaha
Saidpur
Lot 8 Kumira
Ward 12
Ward 25
110
117
67
66
56
97
116
93
103
99
HH = household, km = kilometer.
Source: Bangladesh Bureau of Statistics database.
3.
The following occupations were included in the sample of the household surveys, FGDs, and
KIIs: villagers, businessmen and traders, farmers, passengers, shopkeepers, social elites such as
teachers, religious leaders, local council members, students, day laborers, government officials, and
private sector companies collecting tolls on the Chittagong Port access road. To ensure that all upazillas
in the project roads were covered, a purposive sampling method was used.
4.
The study adopted a before-after approach to assess changes in socioeconomic indicators
before and after the project. Villagers perceptions about the changes in socioeconomic indicators and
about their access to transport facilities, markets, employment, and service institutions were analyzed
to capture the socioeconomic and poverty impact of the project road. Key indicators used to measure
the socioeconomic and poverty impact included: employment, earnings, female employment and
wages, travel costs and time, environment, available social services, and other related activities.
1
2
Upazilla is the third level of administration of local government after divisions and districts (zila).
Mouza is the lowest administrative unit in Bangladesh and its boundary can be easily identified. On the other hand, the
boundary of villages is somewhat unclear in many cases and difficult to define. As such, the study preferred to consider mouza
as a survey unit. A typical village is comprised of several mouzas.
A.
Changes in Socioeconomic Indicators
5.
Diversification of household income and expenditure. The improved roads have increased
economic opportunities and diversified household income sources. Participants in the FGDs and KIIs in
Comilla, Chandina, and Feni reported that the local population was mainly engaged in agriculture
before the roads were improved.3 In recent years, more people are opting for occupations other than
agriculture owing to the increased accessibility to cities and business hubs, which have brought about
new employment and trading opportunities for the population in the project area. More people have
set up their own small business. Major income sources include agriculture, small trade, manufacturing
industries, small and medium-sized enterprises (SMEs), and service institutions such as schools (Table
A7.2).
Table A7.2: Main Occupation in the Project Area: Before and After the Project
2005
Agriculture
Small trade
Rickshaw/Van Puller
Shopkeepers
2012
Small and Medium-sized Enterprises
(SMEs)
Day Laborers
Doctors
Drivers
Farmers
Government Officials
Livestock raiser
Private Services
Rickshaw/Van Puller
Shopkeepers
Source: Household Survey and Focus Group Discussion, November 2012.
6.
A large number of the respondents in the project areas mentioned that the improved roads
have increased their access to income opportunities. Of the 380 sample households along the project
road, 93% of the respondents said that their incomes have increased since the project. 4 A change in
their expenditure patterns has also been noticed since the road improvements. Household expenditures
along the project road sections in basic social services such as health care and education have increased
by 29% and 24%, respectively (Table A7.3).
Table A7.3: Household Expenditures of Sample HHs (%)
Expense item
Food
Heath care/
Medical
Clothes
Education
Water
Electricity
Gas
Transportation
Recreation

(15.59)
Within 2km of the Project Road

(13.17)
28.67
30.03
15.14
23.80
(22.07)
(0.15)
(12.91)
(2.26)
(13.57)
24.24
63.26
(4.12)
23.99
(13.10)
11.88
7.17
Source: Household Survey, November 2012; Commodity Price Index from the Bureau of Bangladesh Statistics.
7.
Household wealth. Household wealth has also increased since the road improvement (Table
A7.4). Changes in household wealth are also positively related to diversified economic activities in the
3
4
Focus group discussions and key informant interviews in Comilla, Chandina, and Feni districts.
Household survey, November 2012.
45
46
Appendix 7
project areas. Ownership of mobile phones has had a tremendous impact on boosting local economic
activities. Farmers and local producers of agricultural products can directly market and sell their goods
to urban-based wholesalers and retailers, eliminating the need for middlemen. The improved roads
have allowed the urban-based wholesalers and retailers of the agricultural-based products and
vegetables to reach rural farmers at the production sites, reducing transportation cost and travel time
in project areas in Comilla, Feni, and Chittagong.
Table A7.4: Household Wealth of Sample HHs in the Project Mouzas
HHs Asset
TV
Motorbike
Car
Truck
Sewing
machine
Mobile
phone
Goat/lamb
Cow/buffalo
Solar home
system
Number of hh who had

(% of total sample hh)

2005
2012
202
300
53.18
78.95
11
22
2.89
5.79
2
5
0.53
1.31
2
4
0.53
1.05
12
32
3.16
8.42
160
347
42.11
91.31
21
23
5.53
6.05
67
89
17.63
23.42
3
4
0.79
1.05
%
49
100
150
Within 2 km of the Project Road

2005
2012
%
105
148
41
55.26
77.89
9
23
156
4.74
12.10
0
0
-
100
167
13
6.84
74
38.95
12
6.31
36
18.95
0
23
12.10
182
95.79
15
7.89
63
33.16
0
117
10
33
33
77
146
25
75
-
hh= household, km = kilometer.

Source: Household Survey 2012.
8.
Trade and Business. Trade and business activities have expanded significantly since the road
improvements. Local people established small shops and restaurants, creating more job opportunities
in the project areas. Improved roads have also allowed investors from large cities such as Dhaka and
Chittagong to invest in the area, resulting in increased land prices and job opportunities. Investors from
outside have set up hotels and restaurants catering to the needs of inter-district passengers using these
roads. These highway restaurants have also created employment for locals, mostly youth.
9.
Apparel industries, beverage factories, agricultural and food processing plants, among others,
are the business investments set up by large investors. Participants in the FGDs have noted that the
price of land has increased over the last few years due to the improved roads.5 Booming land markets
have also been attributed to the higher demand for land. Many investors have purchased large pieces
of land, causing land prices to go up. New companies resell these lands as smaller residential plots to
mostly wealthy residents of nearby cities or district towns.
10.
Because the improved roads allow vendors to quickly supply products and goods, shops in the
villages now sell a variety of goods and products that were not available before. Suppliers can now
directly reach village shops with their own vans to deliver their products and goods. This has reduced
transport costs for small traders in project villages. There has been a significant rise in the number of
shops and customers at the local markets and haat bazaars located on roadsides, attracting and
facilitating trade among villagers. Wholesale markets for vegetables have been found in several places
along the roads. These roadside wholesale markets supply much-needed vegetables for consumers of
5
Focus group discussion in Chandina in Comilla District, November 2012.
large cities such as Dhaka and Chittagong (footnote 4). This increased economic activity resulting from
the improved roads has greatly benefitted vulnerable farmers whose livelihoods largely depend on
agriculture.
11.
Transport use and cost. People in the project area now have access to different kinds of vehicles
for local and long-distance travel since the road was improved. While the number of households using
motorized vehicles has increased, the amount of foot travel has fallen (Table A7.5).
12.
There has been a significant increase in the use of auto rickshaws, specifically three-wheelers
run by compressed naturalized gas (CNG), to travel to nearby villages and cities. Before the project,
local communities would wait longer for crowded buses. Four-wheeler tempos, about the size of a
microvan, are also widely used in the region to visit relatives and travel to nearby market places and
service institutions. Improved roads have allowed local transport entrepreneurs to introduce these types
of vehicle. Many auto rickshaws are owned by their drivers, while many of the more affluent members
have also started new ventures to rent their auto rickshaws on a daily basis to local drivers. This has
helped new forms of transport business to flourish in these regions.
13.
The introduction of various motorized vehicles has had an impact on the choice of the mode of
transportation to travel to nearby places. More people now avoid walking to markets. Instead, they use
more convenient and faster auto rickshaws or tempos.
Table A7.5: Mode of Transport of Sample HHs (% of Total Sample)
Mode of Transport
Foot
Non-motorized
Bicycle
Motorbike
Private Vehicle
Bus
Minibus
Tempo/CNG
Battery-run Auto

2005
2012
35
31
3
3
3
3
2
3
3
3
32
40
3
6
3
18
3
5
Within 2 km of the Project Road

2005
2012
31
29
7
7
1
4
7
8
2
1
31
48
1
3
1
21
1
1
Source: Household Survey, November 2012.
14.
Travel time. Travel time was reduced between project upazillas and major cities, district towns,
and the capital. Before, people spent 3 hours to travel the 66 km from Chandina to Dhaka but now
they can do so in 1.5 hours (Table A7.6). All bypasses in Comilla and Feni that were improved under the
project made the road accessible, facilitating traffic flow and reducing travel distance, resulting in
decreased travel time. Before the construction of the bypasses, traffic gridlock occurred frequently at
the Chandina bus stand, and in Comilla and Feni City. Participants of the FGD in Chandina confirmed
that the travel time between Chandina to the nearest district towns, regional business hub, and the
capital have been significantly reduced. The CPAR has also reduced the travel time for trucks, container
movers operated by freight, and forward service providers.
Table A7.6: Travel Time between Chandina and Comilla, Feni, Dhaka, and Chittagong
Cities
Comilla
Feni
Dhaka (Capital City)
Chittagong
Distance (km)
20.87
76.00
65.55
155.58
Before
(hours)
2
3
3
4
km = kilometer.
Source: Focus group discussion in Chandina in Comilla District, 17 November 2012.
After (hours)
0.3
1.3
1.5
2.0
47
48
Appendix 7
15.
Accessibility to the port. The FGDs and KIIs with transport operators, freight and forward
services providers, drivers and businessmen in Chittagong, Comilla, Feni, and Dhaka have shown that
the port access roads have reduced travel time to the port. Respondents of the KII in Chittagong noted
that the port access roads have decreased traffic congestion to some extent. However, many
respondents of the KII have said that the CPAR remains underutilized and many heavy vehicles still ply
the roads running through the Chittagong city center. Inaugurated on 16 October 2008, the access
road was expected to reduce traffic gridlock in the city center significantly by diverting heavy vehicles
from the Chittagong Port, Chittagong export processing zone, and different terminals at Patenga. The
officials of the Chittagong Port Authority said that a good number of heavy vehicles avoid the CPAR
and use the busy port connecting road to avoid paying tolls, thereby contributing to traffic congestion
in the Chittagong city center.
16.
Transportation of goods and products. Since the project, there has been a significant increase
in the number of light vehicles, which makes it easier for farmers and local businesses to transport
various products and goods, including electronic home appliances, agricultural products, and products
manufactured by SMEs in the rural areas along the project roads. Before the project, 33% of the
households along the roads had difficulties transporting goods to the nearest market places (Table
A7.7). Some 16% of the respondents along the project road sections indicated that they had
experienced problems finding light vehicles to transport their products to the nearest district towns or
large wholesale markets where they could potentially get better prices. Some 7% of the respondents
along the project roads had difficulties transporting electronic home appliances and goods such as
refrigerators and televisions due to the unavailability of adequate light vehicles.
Table A7.7: Difficulties in Transporting Goods and Products before the Project (%)
Type of Goods and Products
Agricultural products
All types of goods
Construction materials
Cotton
Crops
Electronics
Goods to the nearest markets for sale
Fish
Products manufactured by SMEs
Medicine/medical products
Along the Road

36
1
3
0
2
7
33
1
16
3
Within 2 km of the Road

37
1
1
1
4
5
26
2
20
1
km = kilometer, SME = small and medium-sized enterprise.

17.
Agriculture. Although the number of SMEs continues to grow in the project areas, most still
rely on agriculture for their livelihood. The improved roads have contributed to increased productivity
by allowing farmers to use new agricultural technology (Table A7.8). Some 88% of the total sample
households responded that they used tractors for cultivation after the roads were improved. Before the
project, only about 50% of the respondents used tractors. The declining use of animal traction and
hand plows is also evident since the roads were improved.
Table A7.8: Methods Used for Cultivation of Crop Land
Agricultural Methods Used
Tractor
Animal traction
Hand plow
Total Responded
Along the Road

2005
2012
13 (50%)
23 (88%)
9 (35%)
1 (3.8%)
4 (15%)
2 (7.6%)
26
26
km = kilometer.

2005
2012
25 (49%)
12 (67%)
19 (37%)
1 (5.6%)
7 (14%)
5 (2.8%)
51
18
18.
The use of non-motorized vehicles to transport agricultural products has decreased since the
project. Some 1328% of the respondents had to use passenger buses to transport their products to
the nearest markets due to the lack of motorized vehicles (Table A7.9). Since the road improvements,
only 1% of the respondents along the project road use buses to transport their produce. Participants in
the FGD said that they can easily hire pick-up vans, small trucks, or auto rickshaws to transport their
products since the roads were improved. Villagers indicated that transporting agricultural products by
passenger bus was inconvenient as they often had to load their goods on the buss roof. With the
improvement of roads, farmers can now access several types of motorized vehicles such as pick-up vans
and mini trucks owned mostly by local transport operators. A large number of farmers still use nonmotorized rickshaws to move their products to the nearest markets as these are more cost efficient for
small farmers who can hardly afford to rent a pick-up van.
Table A7.9: Vehicle Types Used by HHs to Transport Farm Produce to Markets (%)
Vehicle Type
Hand carry
Locally made motorized pick-up van
Bus
Auto rickshaw
Pick-up van
Rickshaw
Truck
Mini truck
Rickshaw van
Along the Road

2005
2012
3
0
0
1
28
1
7
16
0
11
10
10
0
4
3
0
48
58

2005
2012
0
0
0
0
13
0
0
40
0
14
38
14
0
0
0
0
50
31
19.
Employment. There has been a noticeable increase (about 7986%) in employment
opportunities in the project mouzas since the roads were improved (Table A7.10). Factories along the
project road sections have created job opportunities for women who were previously unemployed. New
industrial plants, such as apparel factories established in project areas, have brought new employment
opportunities to the region. Many new service institutions, such as nongovernment organizations
(NGOs), have started their operations in the project areas, thereby benefitting local people by creating
more employment opportunities.
Table A7.10: Responses on Employment Opportunities after the Project (%)
Project Mouzas
Along the project road
Within 2 km of the project road
Yes
86
79
No
14
21
km = kilometer.
Source: Household survey and Focus Group Discussion, November 2012.
20.
Self-employment among women is very common in the region. Many women have started
small businesses and enterprises in their homes, producing such items as handicrafts or processed
foods. These initiatives not only help generate income, but also ensure that the women can now enjoy
financial independence thereby enhancing their status in the household. As a result, women can now
participate in household decision making. The sample households in the project area responded
positively about the increased employment opportunities offered by various service institutions in the
region since the roads were improved (Table A7.11).
Table A7.11: Responses of Sample HHs on Increased Access to Employment (%)
Project Mouzas
Along the project road
Within 2 km of the project road
Yes
51
54
No
49
46
49
50
Appendix 7
21.
With the improvement of the roads, women in project mouzas now have access to employment
opportunities in agro-based small industries, brickfields, SMEs, educational institutions, garment
factories, NGOs, and hospitals (Table A7.12). The respondents within 2km of the project road said that
women have better work opportunities in garment factories and the education sector (25% and 29%
each). Respondents along the project roads said that women have increased opportunities to work in
various SMEs (23%).
Table A7.12: Responses on Employment Opportunities for Women (% of Sample HH Heads)
Sectors and Service Institutions
Agro Industry
Brickfield
Business
Day Labor
Education Sector
Farming
Garment Factory
Industry
NGO
Nursing
Private Services
Along the Road

3
4
0
10
18
7
25
23
6
1
3
Within 2 km of the
Road
3
3
1
4
25
3
29
18
9
5
2
22.
Access to service institutions and business centers. The absence of adequate service institutions
remains a common phenomenon in rural Bangladesh. Rural populations often experience a number of
barriers in accessing existing service institutions and social services. The absence of road connections is
one of the major challenges to accessing the social and financial services offered by a limited number
of service institutions. The improved roads in Comilla, Feni, and Chittagong have enabled a large
portion of the population in the region to easily access a number of service institutions and social
services, including hospitals, health care centers, wholesale markets, educational institutions such as
schools and colleges, NGOs, government agencies, and information service providers.
23.
The project areas have also witnessed the establishment of various service institutions such as
schools, health care facilities, commercial banks, microfinance NGOs, shops and markets, roadside
restaurants, and filling stations. Large microfinance providers such as BRAC, Grameen Bank, and ASA
have started to offer various social and financial services for the poorest segment of the population in
the surveyed project mouzas. The fieldwork shows that people in the project areas now have more
access to various service institutions and information service providers (Table A7.13).
Table A7.13: Responses on Access to Service Institutions/Business Centers (%)
Service Institutions/Business Center
Schools
Hospitals
Markets
Factories/Industrial Plants
Along the Road

47
63
74
29
Within 2 km of the
Project Road
48
66
74
26
km = kilometer
24.
Access to markets. Market accessibility has also increased with better road connections. The
local population now has easier access to the nearest marketplaces, including wholesale markets
established along the roads. Participants in the FDG pointed out that the improved roads made it easier
than ever to reach the nearest wholesale markets for vegetables. These markets attract buyers from
large cities such as Chittagong and Dhaka, who purchase large amounts of agricultural products and
vegetables. This allows small and medium farmers with limited sources of income to negotiate better
prices for their products.
25.
Access to government services. The FGDs held in Chandina and Feni showed that the improved
roads have enabled many community members to easily travel to the government offices in town. The
roads made it easier to participate in government meetings.
26.
Access to educational institutions. It is difficult to find a correlation between school attendance
and the improved roads, as the government in Bangladesh has continued to provide a range of
incentives to encourage parents to send their children to school, which has resulted in increased school
attendance. However, the roads have made it easier for the local youth, particularly young women, to
attend colleges located in the nearby cities or district towns due to the availability of better transport
services and reduction in travel time. The bypass roads in Chandina in Comilla and Feni have
significantly reduced travel times where most undergraduate-level educational institutions are located.
27.
Access to health care services. Common diseases in Bangladesh include fever, typhoid, colds,
flu, and jaundice. Health care facilities such as hospitals and clinics are available in the nearby upazilla,
town, or district town. Before the roads were improved, it took much longer to reach the upazilla or
district towns to receive these medical services. Participants in the FGDs and key informant interviews
noted that traveling to the nearest health care facility was less time-consuming mainly due to the
improved roads. Travel time to the major health care service providers in the nearest cities such as Feni,
Comilla, and Chittagong has been reduced. Furthermore, it is now easy for the population to transport
patients who need emergency medical attention to hospitals.
28.
Access to financial services. The fieldwork shows that a large number of households currently
have access to various financial services, including microcredit. These service institutions provide a
range of financial services, including support for microenterprises, and benefit a large population in the
project areas. The penetration of increased financial service institutions into the region is also evidenced
by the increased economic activities in the project area.
29.
Land prices. Land prices have risen significantly since the project. Higher land prices change a
land-use pattern. Investors from large cities have bought large pieces of land alongside the roads,
which tends to reduce the amount of land available for agricultural purposes. However, these lands are
reserved potentially for manufacturing industries, which in turn will bring new economic opportunities,
including employment for the local population. Some real estate investors have purchased large
amounts of land along the roads in the project areas and developed it for residential plots (footnote 3).
30.
Environment. Consultations with the local population and KIIs with representatives of local
councils and various government agencies revealed that the project has not posed any major
environmental problems. However, some local inhabitants living adjacent to the roads complained
about noise pollution and excessive dust, especially during the dry season. In Chittagong, a FGD
revealed that the Chittagong Port access road worked as a flood protection embankment, protecting
the villages along the road from flash floods and subsequent waterlogging. Before the project, some of
the villages near the toll collection plaza of the CPAR were flooded every year. Since the roads were
built, using land owned by the government and along the Bay of Bengal, the CPAR has not contributed
to any significant reduction in agricultural lands. Only a few farmers were affected.
31.
Road accidents. Many participants in the FGDs in Chandina and Feni indicated that large
vehicles such as buses, trucks, container trucks, and microvans could run faster due to the improved
quality of the roads, resulting in an increased number of traffic accidents. The participants in the FGDs
and KIIs recommended that road dividers be provided for in the road maintenance and improvement
plan for highways with a lot of vehicular movement. Due to the increased number of vehicles on the
51
52
Appendix 7
roads, head-on collisions have been a regular phenomenon and a major concern for the villagers living
along the road sections. There is no proper mechanism to collect accident data.
32.
The traffic control mechanism for these road sections was found to be weak. The roads also do
not include speed controls, posing a risk for the local population in crossing the roads. Many
participants in the FGDs residing along the road sections said that it has become much more difficult to
cross the roads due to the increased traffic. This has made villagers reluctant to engage in business and
agriculture activities across the roads, limiting their ability to engage in income-generating activities.
Many have, therefore, suggested building low-cost pedestrian bridges over the roads.

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