Project on

Bangladesh Road Maintenance and Improvement

Letter of Transmittal

July 27, 2016

Abdullah Al Masum
Senior Lecturer
Faculty of Business
ASA University of Bangladesh

Subject: Project on Bangladesh Road Maintenance and Improvement

Dear Sir,
I have the pleasure to submit my Project on Bangladesh Road Maintenance and Improvement. It
was a stimulating opportunity and valuable experience for me. I am very grateful for providing
such an important topic.
I have put my best effort to complete the report with all information that I had collected. I am
deeply apologizing for the unintentional mistakes and hope you will oversee those considering
my inexperience. I hope that, you would be very pleased to accept my report and oblige thereby.

Sincerely Yours,
Khandoker Raju Ahamed
ID # 14-2-14-0048
Faculty of Business

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.

Executive Summary
This project performance evaluation report (PPER) evaluates the Road Maintenance and
Improvement Project its performance and highlight its lessons.
The Project
The project was developed in five major road corridors. Developing and maintaining an
effective road network was a key theme in Bangladesh Fifth Five-Year Plan, 1997-2002.
Expanding the capacity of the DhakaChittagong Corridor was necessary to establish efficient
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.

CHAPTER 1

Introduction
This chapter describes the scope of the project, the purpose of this project performance
evaluation report (PPER), and the process taken to prepare it.
Project Scope
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.
Evaluation Purpose and Process
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. 1 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

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.
Background
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.
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.
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.

Rationale
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.
Need for Road Capacity Expansion
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.
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.
Road Maintenance and Funding
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.

Bangladesh: Road Maintenance and Improvement Project 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.
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.
Private Sector Participation Policy
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.
As a result, the private sector had not invested in roads, or participated in their operation. With
persistent traffic growth on the strategic road corridors, toll roads needed to be made more
commercially attractive to private investors to encourage them to invest in the sector. Other
constraints were the lack of both a policy and legal framework to provide clarity and establish
confidence among potential investors that 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 framework for publicprivate partnerships (PPPs).5 Private sector investment
in roads offered opportunities to complement the governments meager resources for road
investments.

Outcomes and Outputs

The projects main objectives and outcomes were to: (i) improve transport
efficiency on the strategic Southeast Road Corridor by upgrading road conditions and increasing
capacity; (ii) increase private sector participation in the delivery of road 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. 5 Prime Ministers Office, Government of the Peoples Republic of Bangladesh. 2004.
Bangladesh: Private Sector Infrastructure Guidelines.
The projects outcomes were to:
(i) improve transport efficiency on the strategic Southeast Road Corridor;
(ii) Increase private sector in road; and
(iii) Improve transport efficiency on existing roads nationwide
Design and Implementation
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.
The project had two components:
1. corridor improvement component (CIC);
2. 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.
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.
Project Risks and Mitigation Arrangements
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.
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
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).
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 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

Bangladesh: Road Maintenance and Improvement Project 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. ADBfinanced 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.
Cost, Financing, and Executing Arrangements
Costs and Financing
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 under spending
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 under spending of 26%. Offsetting these results, land
costs increased from an estimate of $6.1 million to an actual cost of $9.6 million.
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).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 ADB. This amount was
equivalent to SDR 55,660,000. 9 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.
Design and Implementation
Project Scheduling and Implementation
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%).
The main causes of the delays were:
1. Protracted implementation of land acquisition and
2. Resettlement of affected people; 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.
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
Project Outputs
Project Outputs of the Corridor Improvement Component 30. Output indicators presented in the
project framework were:

1. road construction,
2. a policy and legal framework for toll-funded private sector operation and maintenance,
and
3. a legal framework for controlled access highways. The PPER mission confirmed that all
three output indicators were fully achieved.
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: Corridor Improvement Actual Costs by Subproject
1 Overlay and widening of Chandina, Comilla, and Feni bypasses 51.8 19.15
2 Upgrading and widening of FeniChittagong section 1 25.4 30.85
3 Upgrading and widening of FeniChittagong section 2 22.5
4 Construction of Chittagong Port access road (new) 13.6 18.81 km = kilometer.
Source: ADB. 2009. Project Completion Report.
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.
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. A total length of 113.2 km was
improved, slightly more than the 111 km planned at appraisal
Issues, Lessons, and Follow- Up Actions
This chapter discusses issues and lessons pertinent to the project. The lessons provide pointers
for follow-up actions.
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.
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.
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.
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

CHAPTER 3

This chapter examines the projects performance as per standard evaluation criteria. The projects
contribution to institutional development and its socioeconomic impact are also examined.
Overall Assessment
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.

Effectiveness
The project is rated less than effective in achieving the outcomes of the project as defined in the
DMF.
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.
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 without project 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
Efficiency
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.
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.
Sustainability
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.
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.

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.
Development Impacts
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.
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. Lowerlevel 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.

Impact on Institutions
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
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.
Socioeconomic Impact
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 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.
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).
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.
Environmental Impact
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.
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.

Conclusion
All over the Bangladesh road maintenance 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.