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LESSONS:

Hairatan to Mazar-e-Sharif Railway Project

sector: Transport | country: Afghanistan

1. Experience on several ongoing and completed projects in Afghanistan has shown that project implementation is delayed due to two main factors: start-up delays and adverse security issues. Taking advance actions before grant or loan effectiveness can easily address these problems, as demonstrated on this project. Timely actions were taken to speed up implementation readiness, such as advance procurement of works and consulting services, award of contracts, site handover, and timely establishment of a fully staffed project implementation unit. These actions successfully avoided start-up delays. Furthermore, the provision of comprehensive security arrangements, with advance administrative approvals, resulted in an uninterrupted project implementation. Based on a careful assessment of the security arrangements, about 463 police personnel were deployed along the railway line and at about 62 check posts.

2. For implementing large-scale and complex projects with a strict timeframe, the preferred form of contract can be engineering, procurement, and construction (EPC) turnkey. For this project, works were awarded under the EPC turnkey contract using a fixed-price and fixed-delivery schedule with penalties for nonperformance and a bonus for early completion. This provided reasonable economic stimuli for timely project completion.

3. Combining the engineering, procurement, and construction (EPC) and operation and maintenance (O&M) into one package may yield more efficient and cost-effective outputs. On this project, this would have given all the parties a clear understanding of the requirements from the beginning, and risk-mitigation measures could have been built into the contract appropriately. The contractor would also have been particularly vigilant in ensuring the best quality of works during construction. In addition, the bidder would have had an opportunity to come up with more innovative ways of implementation and might have offered a more cost-effective bid. This combination could also minimize any additional due diligence required during the O&M contracting and would result in time savings. However, the concentration and performance risks would need to be mitigated through performance standards and deterrent contractual provisions.

4. For projects where multiple government agencies are involved in decision making, it is important to establish coordination through an executive committee made up of representatives of the concerned agencies, chaired by a high-level government official and/or champion. Such a committee can facilitate the provision of overall guidance, ensuring expeditious approvals from various agencies, and in places where security is a major concern, could ensure that the project is implemented uninterrupted with sustained security arrangements.

5. Implementing a project of this magnitude and in a strict timeframe was quite challenging. However, this can be achieved through exceptional involvement of donors. ADB provided enhanced supervision both from headquarters and the resident mission. Staffs were closely involved in identifying and promptly resolving issues. Any matter requiring ADB’s internal approval was expedited and funds were released with fast-track processing. Furthermore, a fulltime implementation consultant was mobilized by ADB on site to provide coordination, implementation assistance, and independent reporting. All these factors contributed to timely resolution of implementation issues and completion of the project.

Lessons from Validation

Afghanistan: Hairatan to Mazar-e-Sharif Railway Project

The project completion report (PCR) identified a few important lessons, even as the outcome of this project is heavily tied to country conditions that continue to change. Adequate advance actions helped avoid start-up delays. Elaborate security arrangements minimized adverse peace-and-order issues and facilitated project implementation. For projects involving various agencies, the PCR pointed out the merits of establishing an executive committee comprising representatives of concerned agencies. This validation recognizes the value of taking risks in uncertain circumstances accompanied by attention to complementary factors that would contribute to success. In this particular case, it notes that (i) growth rates in traffic forecasts in conflict- affected areas should be conservative when preparing project designs; (ii) operation and maintenance (O&M) costs should reflect actual conditions; and (iii) where there is a risk of incurring losses as in the case of the project, it is essential to define sustainable sources of funding to cover those losses when designing projects, to ensure project economic viability and long-term sustainability.

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