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Microenterprise-based routine road maintenance in China First findings and recommendations Serge Cartier, December 2007.

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Presentation on theme: "Microenterprise-based routine road maintenance in China First findings and recommendations Serge Cartier, December 2007."— Presentation transcript:

1 Microenterprise-based routine road maintenance in China First findings and recommendations Serge Cartier, December 2007

2 Types of rural roads Administrative class  32% county roads  63% township roads  6% village roads Technical class  Class I, II, III  Class IV  Unclassified Surface type  Asphalt  Concrete  Unpaved Based on interest, capacity and financing, this study will focus on paved county roads, both asphalt and concrete Administrative class GuiyangGanzhou km% % County roads1,2439%4,72421% Township roads3,80827%4,55220% Village roads8,99464%13,37459% Total14,044100%22,650100% Ganzhou Road class County Road Township Road Special Road Village Road Total Class I % Class II % Class III % Class IV1, , % Unclassified2,1913, ,43818, % Total4,7244, ,37422, % Guiyang Administrative class Total km ConcreteAsphaltUnpaved km% % % County roads %45673%488% Township roads1, %66135%55029% Village roads4,4971,54434%1122%2,84063% Total7,0222,35434%1,23018%3,43849%

3 Maintenance types Major maintenance Medium maintenance Minor maintenance Routine maintenance Rehabilitation Periodic maintenance Minor repairs Routine (preventative) maintenance

4 First findings Similar characteristics to microenterprise-based model  Standard cost per kilometre  Performance-based contracts  Penalties for non-compliance  Local contracting  Selection process for maintenance workers  Technical training  Contracting, financing and supervision by county However, the technical quality and effectiveness of the maintenance activities is found to be lacking

5 Technical quality and effectiveness lacking Drainage system Vegetation controlSurface maintenanceRoad clearing

6 Causes 1. Inadequate execution of maintenance activities by workers  Limited scope of maintenance activities  Lack of sufficient appropriate tools  Lack of adequate training  Lack of adequate planning of activities and resources  Performance indicators and penalties not applied 2. Lack of cooperation between maintenance workers  Individual contracts  Lack of team building or managerial training 3. Insufficient attention given to maintenance activities  Labour allocations not based on labour requirements  Low salaries (low productivity) 4. Lack of sufficient sustainable and continuous financing  Insufficient allocation of funding  Insufficient priority given to routine maintenance

7 Recommendations for improvement 1. Improvement and expansion of maintenance activities  Inclusion of additional maintenance activities  Increased allocation of tools  Improvement of technical training (drainage system)  Proper planning of maintenance activities  Proper application of performance indicators and penalties 2. Organisation of workers into maintenance teams  Team contracts  Managerial training 3. Introduction of differentiated standard costs  Appropriate average productivity rates (km/worker)  Appropriate differentiated standard costs per kilometre 4. Development of an adequate financing system  Earmarked funding based on the length of the road network  Prioritisation of routine maintenance

8 1. Improvement and expansion of maintenance activities

9 Maintenance activities Road clearing Cleaning of the drainage system Vegetation control in the right-of-way Repairs to road shoulders Repairs to the road surface  Temporary (stones and soil)  Permanent (cement or asphalt) Minor repairs to roadworks (bridges, retaining walls, culverts, etc.) Conservation of road signs and signalling What activities to include?

10 Tools and equipment Limited types and amount of tools Individual allocation What tools to provide and in which quantities? China Tools and equipmentUnits per worker per year Vests and hats2 Wheelbarrows1 Shovels1 Hoes1 Brooms4-6 per year Machetes1 Latin America - Honduras Tools and EquipmentUnits per worker per year Machetes12 Pickaxes1 Shovels2 Rakes1 Files24 Brooms2 Rubber Boots2 Work Boots2 Trousers5 Shirts5 Ponchos1 Hats2 Safety Vests2 Trash Bags12 Latin America – Honduras Tools and equipmentUnits per teamUnits per team per year Wheelbarrows61 Axes21 Hammers12 Hoes61 Garden Scissors21 Large Brooms22 Earth Rammers11 Bars21 Ropes11 Buckets81 Trowels22 Chisels42 Sledgehammer12 Paintbrush 2”62 Paintbrush 4”62 Sandpaper metal301 Sandpaper concrete301 Measuring tape 20m11 Measuring tape 5m11 Torch13 First aid Kit11 Helmet81 Leather Gloves81 Hole Makers32 Cones21 Markers101

11 Technical training and accompaniment Findings  Technical training exists, carried out by county staff  Unstructured and informal (no training manuals)  Limited to the different activities to be carried out (no planning or priority setting) Improve technical training received by maintenance workers and teams  Different road elements, their function and their importance  Effective and efficient execution of maintenance activities (individual / team)  Planning of activities and management of labour and tools by the team  To be carried out by CCB staff, possibly later training institutions Accompaniment by CCB – in future best to be externalised in order to distinguish this role from that of supervision and inspection

12 Performance indicators Unify performance indicators and penalties, based on road elements Attainable, measurable, practical/useful Introduce scoring system Ensure application of performance indicators Ganzhou Road elementPerformance indicator Road pavement The pavement should be kept free of soil, stones and other material, joints in concrete pavement should be repaired and kept free of sand, and potholes and slumped areas should be filled up. Road shoulderThe shoulder should be wider than 50cm, and in sections where this is not possible, slopes should be in place. The shoulder should be without ruts, potholes, caving or indentations, and should be free of weeds and other material. Filling material should be compacted. Side drainThe side drain should be outside the shoulder, 60 cm lower than the road surface and with a bottom width of 40 cm. It should be checked and cleaned regularly during the rainy season. Right-of-wayVegetation should be shorter than 80 cm. SlopesLoose material and stones on the slopes should be removed and the slope should be without rills. Retaining wallThe retaining wall should not be damaged, expansion joints should be maintained and weep holes kept free. BridgesDamage to bridges should be reported and caution signs set up, mud and other material should be cleared. CulvertsDamage to culverts should be reported, and they should be kept clean so as to allow free drainage. Xingguo Road element Maximum Score Performance indicators Road pavement 30 points Road pavement is clean and neat (10 points). 1 point is deducted for each site that does not qualify. Pavement is free of potholes (10 points). 1 point is deducted for each pothole. Pavement is clear of obstacles (10 points). For each obstacle 1 point is deducted. Right-of-way and side drains 35 points Road shoulder is level, of sufficient width and free of vegetation (15 points). 1 point is deducted for each 20m that does not qualify. Road side slope is stable and has no depressions (5 points). 1 point is deducted for each occurrence that does not qualify. Side drains are clean and drain freely (10 points). 1 point is deducted for each 10m of ditch that does not qualify. Bridges and Culverts 10 points The road surface is level at bridgeheads and over culverts (10 points). 1 point will be deducted for each bump encountered. The culverts drain freely (10 points). 1 point is deducted for each obstructed culvert. Road works10 points Road works (including subgrade, pavement, retaining wall, slope protection and bridge railing) which are loose or damaged, are repaired in a timely fashion (10 points). 5 points are deducted for each site which is not repaired timely. Inspections15 points The road is patrolled and inspected regularly, and any problems encountered are reported and caution signs are put up (15 points). If this is not done, 5 points are deducted for every instance that this is not done. If the failure to do this results in an accident, 15 points are deducted.

13 Contract supervision and inspection Findings Inspections at least every month by CCB or TCB staff Not always based on performance indicators Penalties generally not applied Capacity exists, at least at county level Ensure application of performance indicators and penalties Possibly include performance indicators for CCB and TCB staff

14 2. Organisation of workers into maintenance teams

15 Organisational modality Currently individuals  Low motivation/productivity  Low ability to efficiently respond to emergencies and other peaks in maintenance requirements  Difficult to supervise Recommended to form maintenance teams  Together responsible for maintenance of stretch of road  Improved ability to respond efficiently to emergencies and peaks in maintenance requirements  Easier to supervise  Higher productivity  Introduction of entrepreneurship

16 Organisational modality Public/Private Limited Liability Company  Registered capital 30,000 CNY  Enterprise income tax (20%) Individual Enterprise  Single-owner  Registration with County Business Administration Bureau  Individual income tax Partnership Enterprise  Registration with County Business Administration Bureau  Individual income tax  Additional employees  Unlimited liability for paying debts Farmer Special Cooperation  80% farmers

17 Team formation Develop clear guidelines regarding the call for candidates, ensuring wide participation Elaborate simple objective selection criteria  Eligibility criteria – Priorisation criteria  Technical criteria Work experience Educational level Entrepreneurial attitude Location  Socio-economic criteria Family size and structure Poverty level Employment situation Gender  Scoring system

18 Managerial training and accompaniment Findings  No managerial training provided  Maintenance teams not stimulated to work together Provide managerial training to maintenance teams  Planning of activities and management of labour and tools by the team  Management of the maintenance team or microenterprise (teamwork, conflict prevention, etc.)  Preparation of reports, paying taxes, accounting  To be carried out by CBAB staff Accompaniment by CBAB

19 3. Introduction of differentiated productivity rates and standard costs

20 Productivity rates Assumed that productivity rates per activity are similar to Latin America – to be confirmed in pilots Amount of work by activity to be determined for different road categories based on experience from pilots Average productivity rate (km/worker) to be determined for different road categories based on experience from pilots Possible criteria for road categories  Area of right-of-way  Pavement type  Number of drainage and other roadworks  Climate conditions (rainfall)  Topography Based on current productivity rates and maintenances levels, estimated average productivity rate 4 km/person

21 Maintenance costs – Salary level Salary level – main determinant of maintenance costs  Agricultural wage rates (occasional labour) China28.5 CNY/day Guizhou province35CNY/day Jiangxi province25CNY/day Kaiyang county35-50CNY/day Baiyun district20-25CNY/day Ganxian county40CNY/day  Minimum wage Guizhou province18CNY/day Jiangxi province19CNY/day  Current maintenance salaries Kaiyang county30CNY/day Ganxian county20CNY/day Xingguo county30CNY/day Selected salary level: 30 CNY/day

22 Maintenance costs – standard cost Salary  30 CNY/day – 7,920 CNY/year  4 km/person – 1,980 CNY/km/year Allowances  Tools, social security and transport  25% of labour costs (20% of total costs) – 495 CNY/km/year Total cost – 2,475 CNY/km/year This does not include material costs Standard cost for county roads - Township and village roads may be less (although salary levels will be the same, the average productivity rate will be higher) CountySalary costsMaterial costsSubtotal Xingguo1,6801,2002,880 Ganxian1,2001,3002,500 Kaiyang600 Baiyun

23 Contracting modalities Government procurement law  Single-source procurement < 50,000 CNY  Invited bidding (3 bidders)  Public invitation > 500,000 CNY Standard cost 2,475 CNY/km – 20 kilometres Division of road sections into shorter stretches Team size < 5-6 persons Guarantee for satisfactory completion (2%) – necessary? Simple contract document Ganxian county – Ganzhou municipality Section nameTotal length Section lengthKm/team Shexi-Youzhen Hujiang-Gutian Hujiangbridge-Shunfeng13.10 Dahujiang-Jiangkou Nantang-Huapin13.80 Chuanxi-Jitan Jingouxing-Baohuasi8.58 Meilin-Datian13.90 Datian-Zhoujia36.15 Datian-Wangmudu Fengshu-Dalong12.56 Xiaopin-Xiaoben Dashixia-Xinfeng6.22 Meihu32.03 Luchang-Qingqing Farm Average

24 4. Development of an appropriate financing system

25 Financing mechanisms Lack of sufficient and timely financing  Lack of funding  Lack of priority given to routine maintenance  Need to earmark funds for routine maintenance Funding sources  Regular vehicle maintenance fee Collected at provincial level Allocated by PCD to counties (according to length of road network?) 7,000 / 3,500 / 1,000 CNY/km for county / township / village roads All maintenance types – however, also used for construction In general used for major and medium maintenance  Motorcycle and farm vehicle maintenance fee Collected at county level – transferred to PCD Allocated by PCD and subsequently by municipality to counties In general used for routine and minor maintenance, but also medium and major maintenance, construction and management costs

26 Financing mechanisms - Guiyang Guiyang regulations  Regular vehicle maintenance fee for major and medium maintenance  Motorcycle and farm vehicle fee for routine and minor maintenance 80% county, 20% municipality Result in disincentives and lower priority for routine maintenance Much higher than the proposed standard cost of 2,475 CNY/km Insufficient funding Administrative level ConcreteAsphaltUnpaved County10,0007,0005,000 Township7,000 2,000 Village1, Administrative level ConcreteAsphaltUnpavedTotal kmRMBkmRMBkmRMBkmRMB County roads1171,169, ,194, , ,605,559 Township roads6934,848, ,628, ,099,9781,90410,576,382 Village roads1,5442,316, ,4532,8401,420,0804,4973,905,012 Total2,3548,334,2021,2307,990,9883,4382,761,7637,02219,086,953 Maintenance feeJiangxi ProvinceGuizhou Province Car maintenance fee1,542,845,1001,000,780,000 Motorcycle and farm vehicle maintenance fee139,845,00012,750,000 Late fee25,234,800 Interest483,200310,000 Total maintenance fee1,708,408,1001,013,840,000

27 Financing mechanisms - Ganzhou Financing routine and minor maintenance with farm vehicle fee Much higher collection by counties (Ganzhou – 70 million CNY), but only half allocated to road maintenance (35 million CNY) Sufficient funding for application of standard cost But allocated funding used for all maintenance and management costs – 40% used for routine and minor maintenance (14 million CNY) Only enough to cover county roads – not including minor maintenance Road typeCountyTownshipVillage Applied cost2, Road length4,7244,55213,374 Maintenance cost (million CNY/km) Maintenance feeJiangxi ProvinceGuizhou Province Car maintenance fee1,542,845,1001,000,780,000 Motorcycle and farm vehicle maintenance fee139,845,00012,750,000 Late fee25,234,800 Interest483,200310,000 Total maintenance fee1,708,408,1001,013,840,000

28 Financing mechanisms – priorities Priority needs to be given to (preventative) routine road maintenance, which neither municipalities currently does Saving of 8,850 CNY per kilometre per year! Need to develop incentives for prioritising routine maintenance  Clear distinction of different maintenance types and their funding  Funding based on use of regular vehicle maintenance fee  Allocation based on length of road network  Taking into account creation of a fuel tax in the future AlternativeConstruction costs/km Periodic (medium) maintenance costs/km Routine maintenance costs/km Lifespan (years) Overall costs/km Yearly costs/km Without routine maintenance 500,000 7, ,00057,000 With routine maintenance 4,0002, ,70048,142

29 Next steps

30 Decisions to be taken during this mission Focus on paved county roads Include additional maintenance activities (which?) Provide additional tools and in larger quantities Develop improved technical training Elaborate system of performance indicators and ensure application Continue with inspection by CCB Organisation of workers into teams Application of the legal organisational modality of Partnership Enterprises Develop guidelines for calling and selecting candidates (technical/social criteria) Develop a managerial training Apply average productivity rate of 4 km/worker Use salary of 30 CNY/day Apply standard cost of 2,475 CNY/km Develop road categories and differentiated productivity rates / standard costs Limit road sections to 20 km to allow for single-source procurement Apply waiver for guarantees and use simple contract documents Prioritise routine maintenance over other maintenance types Ensure sufficient funding (for pilots)

31 Preparation for next mission GCB, CCB and consultants Selection of county for pilots Selection of 2 road sections (paved county roads) Selection of CCB and CBAB staff to assist in the pilots Ensure funding for pilots (one year) Select villages to participate in pilots and inform them of process Consultants Prepare general guidelines on microenterprise-based routine road maintenance Prepare technical training manual (road elements, maintenance activities and planning, management of resources) Prepare entrepreneurial manual (call and selection of candidates, enterprise formation, managerial training)


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