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LESSONS:

People’s Republic of China: Heilongjiang Road Network Development Project

sector: Transport | country: China, People’s Republic of

The importance of rural link roads. The project was able to deliver benefits to the project area through the inclusion of both the provincial highway upgrade and the rural link roads in the project design. The socioeconomic benefits of these roads were very important, allowing all-weather access to jobs and services (health care, transport). The Heilongjiang Provincial Department of Transportation advised that it is frequently difficult to gain funding for rural roads because they are of lower priority than the expressways and highways, and ADB support for these projects provided valuable social impacts.

Consideration of local practices and knowledge. The Heilongjiang Provincial Department of Transportation has extensive experience in road design and construction, knowledge of ADB practices and requirements, and clear boundaries for its responsibilities. Although international practices can be usefully included in projects, they do not always work well in the local context. The agencies have nearly 20 years of experience with ADB and it is likely there are well-qualified local resources available to lead the project preparatory technical assistance studies to prepare project designs and implementation plans that are streamlined to deliver the project in the local context and in compliance with ADB requirements.

Hidden costs of low-cost bids. The difference between the budget and actual cost of supervision and training for the project indicates that the project required substantially more supervision than originally planned. The Heilongjiang Provincial Department of Transportation attributes this higher cost, at least in part, to the selection of the low-cost bidders for portions of the civil works. The project completion report (PCR) states ‘four [of the 26] contracts (procured under international competitive bidding) were awarded on an exceptional basis [due to the very low prices] without determining the combination of bids offering the lowest evaluated cost.’ Although these contracts were subjected to higher performance securities, such bids rarely include adequate management and contingency budgets. Therefore, to ensure appropriate quality, greater executing agency supervision and monitoring during construction is required. Comparisons of bids on the basis of established provincial reference prices and the expected quality of the higher cost bids should be undertaken before contract awarding, with no exceptions granted for exceptionally low-cost bids, is likely to result in a better project implementation process within the expected supervisory budget.

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