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Engagement of highly qualified consultants and better monitoring and management of consulting contracts are crucial to the success of projects.

The construction supervision consultant had adequate staff and a well-organized personnel structure in the project site. However, frequent personnel changes hampered the implementation of some tasks. Measures to minimize staff changes and associated delays should be agreed upon with the consultants at project start-up. Careful assessment of consultants’ qualifications, including those of individual team members and better monitoring and management of consulting contracts should be undertaken to ensure that highly qualified and performing consultants and the necessary institutional processes are in place to support project implementation.

Project-specific design and monitoring frameworks (DMFs) are vital to assessing the progress of each project/tranche in an MFF/investment program.

At appraisal, the project adopted the impact and outcome statements and performance indicators of the overall investment program in its DMF. While at completion, the DMF remained valid and its output-outcome results chain remained logical, a project-specific DMF should have been developed using a time-slice approach that captures the process characteristics and anticipated results from project 1. This would have enabled an accurate assessment of the progress made at each project milestone, in turn allowing for timely adjustments to be made, if necessary. It would also have resulted in a streamlined set of indicators, containing only those applicable to the project.

Accuracy in economic viability analysis requires the analysis to be conducted based solely on the project outcome.

The project had two economic analyses at appraisal─one for the 450-kilometer combined planned outcomes of projects 1 and 2 and another, for the 304-kilometer road stretch between Km 372-676, of which project 1 was part. To be accurate, only an economic analysis of the 200-kilometer planned outcome of project 1 should have been done at appraisal. Ensuring that the economic viability of future projects is based solely on their intended outcomes will prevent miscalculations from being embedded in the project designs.

Taking into consideration the exogenous factors that can influence the pace and timing of results is essential in setting realistic timetables.

Project experience has highlighted some exogenous factors that are highly influential in setting the implementation pace and timing of results of loan projects in Kazakhstan. Foremost among these factors was the need to comply with government procedures requiring (i) the issuance of a Presidential Decree before loan signing; (ii) the ratification of the signed loan agreement by the Parliament; and (iii) a legal, scientific, and linguistic review of the loan agreement. These procedures held back by 1.4 years the loan effectiveness. Government streamlined these procedures in 2014, reducing the prescribed period for loan signing to 4 months and for loan effectiveness to 5 months, after ADB approval. Other key factors that delayed project start-up were the slow mobilization of equipment, machinery, and materials; and the lengthy procedures in obtaining construction permits. The preparation of future loan projects in Kazakhstan should take these exogenous factors into consideration to ensure that project schedules are realistic.

Background

Kazakhstan, located at the center of transport flows between Asia and Europe, provides strategic arteries for emerging transcontinental routes. It has a great transit potential, as few land transport routes can avoid the country when going north to south or east to west of the two continents via Central Asia.

To maximize its strategic location, Kazakhstan has invested heavily in upgrading its transport linkages. By 2010, it accounted for $12 billion of the estimated $25 billion investments earmarked for the development of the 6 transport corridors of the Central Asia Regional Cooperation (CAREC) in 2008–2017. Passing through 7 of CAREC’s 11 member countries Corridor 2 is the most extensive of these corridors. It connects Kazakhstan to Azerbaijan and Europe through the Caspian Sea to the west; to the Russian Federation to the north; to Uzbekistan to the southeast; and to Turkmenistan to the south.

In support of the 3 corridor 2 projects planned by Kazakhstan, the Asian Development Bank (ADB) approved the CAREC Corridor 2 (Mangystau Oblast Sections) Investment Program in September 2010. The investment program was to be financed through a multitranche financing facility (MFF) not exceeding $800 million, $233 million of which was approved in December 2010 to help cover the cost of project 1.

Under project 1, 200.5 kilometers of the Manasha–Shetpe highway in Mangystau Oblast, Kazakhstan’s major oil- and mineral-producing region, was upgraded to international standards. Dangerous curves were removed, pavement roughness and road geometrics were improved, and road safety facilities were installed. Pedestrian overpasses and sheltered bus stops and rest areas with gender-sensitive toilets were constructed. The project management capacity of the executing agency, the Ministry of Transport and Communications (MOTC), and its successor, the Ministry of Investment and Development (MID) was strengthened. A World Bank-financed road asset management system was developed. An inventory of road assets was completed, and preparation of maintenance and rehabilitation planning tools continued until project completion.

Successful upgrading of the road infrastructure resulted in shorter travel time, lower freight costs, and lower road crash rates along the highway that connects Mangystau’s capital of Aktau to the CAREC transport corridor 2. Aktau is a regional hub for transporting Caspian’s bulky oil and oil product cargoes, and for transit traffic between the surrounding oilfield developers and other countries. Improved transport to and from this port city which, in 2010 was the artery for 38% of the 30 million tons of cargo transported annually across the Caspian Sea, supports increasing trade and strengthens regional cooperation under CAREC.

Despite a start-up delay of over 2 years, the project was completed on time and with an unused loan amount of $104 million. Initial delays were attributable to the need to comply with government regulations on loan effectiveness; the slow mobilization of construction equipment, machinery, and materials; and more. Unused loan proceeds, representing savings in works contract amounts, were cancelled in July 2014.

The MID succeeded the MOTC as executing agency, following government reorganization in August 2014. The Committee of Roads was the implementing agency.

Project Information
Project/Modality: 
MFF
Source of Funding: 
OCR
Loan Number: 
2728
Report Date: 
September 2017
Date Approved: 
20 December 2010
Report Rating: 
Successful

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