1. Rural Access Programme Development through access RAP3 and the Private Sector Presentation for RAP3 Consultant’s Forum Michael Green June 2014

2. Rural Access Programme Development through access RAP3  RAP3 Implementation £31.5m –  Works with district and central GON and private sector (14 districts)  Employment for the poor maintaining, upgrading, constructing rural roads. (14 districts)  Savings, literacy, income training as in RAP2 (14 districts)  Sustainable agricultural, small businesses, economic infrastructure (8 districts)  Trail Bridge construction (8 districts)  Rural Employment Guarantee Programme Support £3.6m –  GON Karnali Employment Program (KEP) in Mid and Far West regions.  TA in pilot districts and at the national level. (2 districts)  Improving targeting, awareness, wage payment systems, registration, planning and monitoring, transparency, capacity and coordination with local government.  Lessons learned inform a National Employment Guarantee Scheme  Results, Evaluation and Policy support, £1.35m –  third party continuous monitoring (8 districts)  separate studies to capture lessons on specific issues  inform the design of future donor and government programmes. 2

3. Rural Access Programme Development through access Strategic SWOT Analysis – 2012  Spending in LRN sector likely to continue to increase over next ten years and outstrip capacity of DDC and DOLIDAR to manage the sector.  Without a substantial improvement in management of the sector SWAp funding aspirations of GON will not be achieved.  Chronic weaknesses that need to be overcome  a) span of control -1:75 agencies vs SRN 1:1 agency  b) district level planning and implementation  c) M&E impact and progress reporting.  These issues will take a long time to solve in terms of GON capacity to manage LRN sector.  GON needs a shorter term strategy

4. Rural Access Programme Development through access LRN Outsourcing Strategy  Outsourcing to the private sector is probably the best short term option and will appeal to the donors as well.  DOLIDAR should therefore reposition its role as management agency of the sector by outsourcing planning, design, supervision and M&E to the private sector through area contracts.  Payment for this support could be through TA assistance linked to donor projects or paid out of the LRN works budget.  Negotiate with donors for this in design of next generation projects post 2013.

5. Rural Access Programme Development through access Current Span of Control

6. Rural Access Programme Development through access Area Based Outsourcing Approach MOFALD/DOLIDAR/SWAp Area Contract 1Area Contract 2Area 3 ContractArea 4 ContractArea 5 Contract 9 15 161916 DFIDADBSDC WB ADB DDC’s supported by Area TA’s

7. Rural Access Programme Development through access Looking to the Future

8. Rural Access Programme Development through access RAP3 Districts

9. Rural Access Programme Development through access Budget and Components (GBP)

10. Rural Access Programme Development through access District Road Core Network  New Construction – (4)  Humla, Mugu, Bajura, Kalikot  Maintenance – (10)  Doti, Achham, Dailekh, Jumla  Dadeldhura, Parbat, Sindhupalchowk, Morang, Jhapa, Sankhuwasabha  SED (8)  Humla, Mugu, Bajura, Kalikot (RAP2 style)  Doti, Achham, Dailekh, Jumla  Capacity Building/Policy Harmonisation (14)  Doti, Achham, Dailekh, Jumla, Humla, Mugu, Bajura, Kalikot  Dadeldhura, Parbat, Sindhupalchowk, Morang, Jhapa, Sankhuwasabha

11. Rural Access Programme Development through access

12. Rural Access Programme Development through access DRCN First Year Funding

13. Rural Access Programme Development through access Example of Outsourcing - UK  The UK Highways Agency's operations are split into six regions that are roughly based on the regions of England.  These regions are subdivided into 13 operational areas. These areas are managed and maintained by an Area Team and a contractor, known as a Managing Agent (MA) or Managing Agent Contractor (MAC).  These combine supervision consulting and contracting. In addition, there are a number of sections of road that are managed by DBFO contracts separate from the area teams. 13

14. Rural Access Programme Development through access Nepal LRN post 2013  Translated to Nepal a Central TA supports DOLIDAR  DOLIDAR keeps its project managers in KTM as now with Area TA’s supporting DTOs in Districts as per RTI Pilot.  In addition, there will be a number of projects eg SDC Bridges that can be managed through contracts that are separate from the area teams.  Once established and working move towards SWAp funding agreements with donors.  This will probably include elements of World Bank’s Program for Results 14

15. Rural Access Programme Development through access Post 2013 New Generation Projects 15

16. Rural Access Programme Development through access SWAp Asset Management  RAP3 supports GON SWAp programme in 14 districts  LRN investment based on District Transport Master Plans (DTMP).  Identify minimum network to link VDC and District HQ- District Core Road Network (DRCN)  New GON policy puts maintenance first; upgrade to all- weather; new last.  DTMPs to guide short, medium and long term investment by donors and GON ready by Dec.  Annual investment based on ARAMP 16

17. Rural Access Programme Development through access RAP3 Modality  LRN Maintenance through DDF  LRN Upgrading – Start direct  New construction – Start direct  Income generation – Partners  Economic infrastructure – Linked to IG  Capacity Building – Annual Support Plans  Central GON, Districts DTOs and Private Sector 17

18. Rural Access Programme Development through access  The key to delivery of the new generation of results based LRN contracts are private sector consultants and contractors.  Can they do it?

19. Rural Access Programme Development through access  The End

20. Rural Access Programme Development through access Consultant Procurement & Performance RAP3 Consultant’s Forum Bill Seal (Engineering Team Leader) 5 th June 2014 20

21. Rural Access Programme Development through access Purpose & Context  An open and honest view of RAP3’s experiences with our Consultants so far,  Overview of the significant performance issues and deficiencies (generalisations),  Ambition:  Not to blame, ‘sling mud’ or squabble,  Expose the issues, discuss openly and agree on how we can improve (Consultant & Client). 21

22. Rural Access Programme Development through access Current Engagements  Stage-1 Design: 5 num (3 months) – Lump Sum  Improvement Design: 3 num (3 months) – Lump Sum  Construction Supervision & Stage-2 Design: 4 num (3 years) – Time Based  LRNAM Support: 10 num (2 years) – Time Based  Total: 22 ongoing assignments 22

23. Rural Access Programme Development through access Earlier Experiences  More than a decade of Consultant partnerships (RAP1 & RAP2)  Presumptions Summarised:  Company involvement low (‘body shops’)  Inadequate care (to project / client)  High staff turnover / dissatisfied staff / absenteeism  Long-vacant positions (following resignations)  Competency / skill issues 23

24. Rural Access Programme Development through access RAP3 LRN Strategy  P4R (‘payment for results’) where possible  Lump Sum / Milestone contracts  Reward performance  Multi-year contracts with extensions linked to Consultant performance  Time-based contracts for supervision / support assignments due to complexity  Quality & Cost Based Selection (QCBS)  Nepal Road Sector Assessment Study  DDCs to outsource services  Support development of the Private Sector 24

25. Rural Access Programme Development through access Employment of Consultants  Why employ Consultants?  Flexibility for changes in work size and scope  Management of man-power resource  Technical back-stopping and expertise  Checking and quality assurance  Value for money  The Alternative?  Develop large in-house teams (RAP3)? 25

26. Rural Access Programme Development through access Service Procurement Challenges  How to …..  engage competent firms?  ensure value for money (judging the appropriateness of financial bids / relationship of higher fees to better quality?)  encourage assignment of capable / appropriate staff?  retain staff – adequate expenditure on staff employment / facility packages?  Answer: not just to ‘pay higher fee rates’ 26

27. Rural Access Programme Development through access RAP3’s Procurement Approach  Pre-qualification  Standing lists  Expression of Interests  Specific & targeted invitation (i.e. on district-wise basis not generic)  Pre-bid Briefing Meeting  QCBS  80% technical / 20% financial 27

28. Rural Access Programme Development through access Improved ‘Request for Proposals’ (RFP)  Chapter limitations:  Standard methodology provided (LS contracts only)  Methodology – 7 pages max  Comments on ToR – 2 pages max, etc.  CVs:  Provide a summary sheet (abstract)  Need not be full-time employee (benefit for 6 months previous only)  Realistic ceilings on full-mark experience  Staff Provisions:  Allowances – to be the same or better than those of the Client  Payment of Allowances – will be treated as ‘reimbursable’ items  No ‘leave in lieu’ – Client will pay only for periods assigned i.e. rates to be inclusive (leave, overtime, bonuses etc.)  Ethics:  Strong emphasis  ‘Whistle blowing’ etc. 28

29. Rural Access Programme Development through access Engineer’s Price Estimates  RAP3 intentions:  To promote the payment of ‘good’ rates (better than before)  Support private sector initiatives  Approach:  Target adoption of ‘Society of Consulting Architectural & Engineering Firms’ (SCAEF) published schedule of ‘Monthly Billing Rates’  Bench-marking to earlier RAP experiences to gauge VFM 29

30. Rural Access Programme Development through access SCAEF Schedule of Fee Rates  Current version is 2010 (not updated)  Quotes a multiplier (OH, fees etc.) of 2.61  High at ‘top end’, low at ‘bottom end’  Senior Eng: NRs 267,500 p.m.  IoW: NRs 85,600 p.m.  AutoCAD Operator: 35,000 p.m.  Applicable for staff with > 15 years exp.  30% reduction 7 to 15 years  60% reduction 3 to 7 years  Some necessary adjustments had to be applied  Benchmarking to RAP2: approx. 30-35% higher (like for like with inflation) 30

31. Rural Access Programme Development through access Technical Proposals  Very little original thought – even in ‘comments / suggestions’  Copy and paste  CVs (the biggest scoring section)  poorly presented  summaries incorrect / overlooked, difficult to evaluate  nomination based on potential score not ability / suitability  authenticity of CV content? 31

32. Rural Access Programme Development through access Financial Proposals / Negotiations  Prices widely dispersed (85% - 175% of Estimate)  Patterns of bidding:  ‘Scatter’ vs. ‘Cluster’ (several clusters ~ 150%)  Significant suggestion of collusion / lack of competition  RAP3 negotiation approach:  Competition / near Estimate: no negotiation on fees (5 out of 14 packages)  Grossly high / uncompetitive: offered at Estimate (9 out of 14 packages) – all bidders accepted  Bidders in negotiated packages all formally agreed:  Rates still sufficient to meet ToR without reduced quality  Rates still sufficient to retain staff 32

33. Rural Access Programme Development through access Mobilisation / Implementation  Slow mobilisation (far longer than agreed)  Immediate staff changes / difficulties in finding matching replacements (RAP3 provisioned 5% fee reduction for 6 months)  Poor understanding of ‘Inception’ / ability to design / tune an approach (HQ input needed?)  Team organisation / logistics  Supplementary staff proposals (LRAMS)  Late and poor quality provision of resources (office facilities, transport etc.) 33

34. Rural Access Programme Development through access Performance Issues (Firms) 1)Late staff payment (pay-when-paid approach) – despite receiving an advance 2)‘Pay-what-paid’ approach i.e. hints of unpaid leave, unpaid travel etc. 3)Professionalism – narrow consideration limited to profit / fees / cashflow, lacking professional duty on project delivery 4)Self-checking absent (reliance on Client) 5)Inadequate backstopping (HQ support) 6)Slow replacement of unavailable / resigned staff (to the detriment of project) 7)Arbitrary assignment of staff (Lump Sum Contracts) 8)Assign inappropriate staff (age, fitness, non-drivers, attitude, suitability, etc.) 9)Lack of responsibility (safety, project delivery / cost control) 10)Lack of pride? 34

35. Rural Access Programme Development through access Performance Issues (Staff) 1)Engineers or Technicians?  Technicians: apply technical procedure accurately,  Engineers: direct, solve, evaluate, Interpret, judgement, research, relevance, VFM, leadership, etc.) 2)Over-reliance on software (‘blind’ application) 3)Reliance on templates not understanding, inability to truly ‘design’ 4)Unquestioned faith in design drawings (however ridiculous) 5)Lacking professional / self development 6)Leave management / high absenteeism 35

36. Rural Access Programme Development through access Summary of Key Issues - 1 SeqIssueStrategy? 1.How ‘clean’ is the sector? If fair competition is absent the procurement approach wont work. 1.SCAEF to promote honour, integrity and professionalism. 2.Clients urge ‘whistle blowing’ and enforce ‘black- listing’ 2.Lump-sum contracts unworkable in the present context? 1.Abandon LS approach - make everything input / time based? 2.Introduce Liquidated Damages to combat ‘time at large’ delivery? 3.80/20% QCBS is not delivering value or competition 1.Adjust the split more in favour of cost say 50/50 or 40/60 (Quality / Cost) 4.Engineers lacking structured professional development 1.SCAEF to move toward introduction of a professional qualification (not merely registration), 2.SCAEF to seek to influence university degree course content, practical training etc. 3.Increase professional training opportunities 36

37. Rural Access Programme Development through access Summary of Key Issues - 2 SeqIssueStrategy? 5.Take responsibility for their deliverables (Consultants) 1.Consultants to take full responsibility for their service deliverables rather than rely on clients to do their checking and supervision i.e. develop internal systems for quality assurance. 2.Clients need greater redress; introduce requirement for Performance Securities, Indemnity Insurance etc.? 5.Lack of trust (in Consultants by Clients) 1.Earn it through delivery. 2.Demonstrate a clean and competitive sector. 3.More engagement workshops. 6.Commercial aspects not fully understood by Clients 1.SCAEF to lead in improving their schedule of rates, disseminating and developing credibility 37

38. Rural Access Programme Development through access ‘Step forward, or backward?’ THANK YOU 38

39. Rural Access Programme Development through access RAP Consultants Forum Some Engineering Do’s and Dont’s 5 th June 20147 TIMOTHY J.R STIFF Senior Technical Director (Management Services) IMC Worldwide Ltd, UK

40. Rural Access Programme Development through access Safety, Safety Safety Do enforce safety on the sites Hard Hats Wellington boots Gloves and Goggles (especially when breaking rock) Safety Harness when working on steep slopes Check that First Aid pack is available and restocked as necessary in good time

41. Rural Access Programme Development through access Planning of the Works Do Discuss, Plan and Agree how the works are to be carried out  Ensure that everyone in the RBG understand the method of working and emphasise the key safety and environmental issues  Re-Brief as often as required so that everybody is working to the same plan

42. Rural Access Programme Development through access Do check excavation and fill slopes for stability Do look for signs of slope movement Such as tension cracks upslope or down slope, loose rocks or stones loose soil etc and warn and take corrective action in good time

43. Rural Access Programme Development through access The Gabions need for properly constructed gabion boxes with tightly wired edges Do Ensure that only correctly made gabions are used in the works

44. Rural Access Programme Development through access Do take care to check the design and detailing of retaining walls Retaining walls are a large capital investment and need to be dsigned in strict accordance with the RAP procedure Cross Sections are required at a minimum of 10 metres along the length of the proposed wall and at least 10 metres past it on each side to ensure the wall geopmentry is appropriate

45. Rural Access Programme Development through access Gabion walls Do bed the gabions in alternate stretcher and header courses so that it can distribute any movement most effectively

46. Rural Access Programme Development through access Do provide adequate drainage to the base of the the retaining wall foundation and back of wall drainage on the wall itself

47. Rural Access Programme Development through access Do -Establish Semi permanent chainage markings Establish chainage markers where they can be seen and on permanent feature if possible. Re establish as necessary

48. Rural Access Programme Development through access Road Drainage  The consideration of the drainage of the road is critical in ensuring the long term stability of the asset.  Do consider where the water is going  Do Minimise drainage runs to prevent concentration of water at outfalls  Optimizing surface cross drainage is often more easily accomplished by site survey and analysis of an existing segment rather than during the preconstruction phase of road development, as concentration problems and opportunities for their reduction are then readily apparent.  Therefore do visit the road during, or straight after any rains to identify problems  Field inspection of cross drainage needs is especially enlightening during intense climatic events.  Analysis of a road segment from top to bottom allows dealing with concentrations as they develop,preventing any single concentration from reaching problematical proportions.

49. Rural Access Programme Development through access Do pay close attention to cross Drainage Details  Do consider how the water can cross the road especially where large season streams are apparent  Use geotextile or bamboo mats under stone pitching where necessary to ensure that the raod formation does not soften and erode during each rainy season  Closely consider where the water will actually go taking account of the existing grades  Do use the Staged construction approach to fine tune any designs as necessary

50. Rural Access Programme Development through access Do look around to identify any potential problems  Familiarity breeds contempt and walking down the same section of road results in one not actually seeing what is there  Don’t take the same short cuts each site visit otherwise lengths of road could not be looked at for long periods  Do write down any issues identified (locating them accurately using the permanent chainage markers that should be visible)  Do identify any addition recommended work in good time with estimates of time and cost implications for discussion with the DTL/EO

51. Rural Access Programme Development through access Do Ask!  If you are not sure about any details or cause of a problem - ask don’t leave it to get worse!  Nobody will think any less of you and you may just save a large embarrassment to the Project!  Don’t be afraid to suggest alternative solutions to a problem – you may just have come up with an innovation!

52. Rural Access Programme Development through access Thank you for listening  Any questions, comments or observations to share ?

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63. Rural Access Programme Development through access Supporting the Private Sector – International Experience Private Sector Workshop Kirsteen Merrilees June 2014

64. Rural Access Programme Development through access Overview  Strong (Civil) Engineering Sector  Examples of Support to Private Sector  Private Sector in Nepal

65. Rural Access Programme Development through access STRONG (CIVIL) ENGINEERING SECTOR

66. Rural Access Programme Development through access Features of a strong sector Strong Sector Influence Policy Environment Self Regulation Professional and Ethical Standards Professional Development Performance rewards

67. Rural Access Programme Development through access Civil Engineering Sector in UK  Association for Consulting and Engineering  register of firms – code of business practice and ethics  Engineering Council  regulatory body for engineering profession  standards for professional competence, ethics  Institution of Civil Engineers  professional development and qualifications  influencing government policy and strategy

68. Rural Access Programme Development through access Professional Engineers Professional Engineer A. Innovation and technology B. Engineering solutions C. Management and leadership D. Communication skills E. Professional standard and ethics

69. Rural Access Programme Development through access EXAMPLES OF SUPPORT TO PRIVATE SECTOR

70. Rural Access Programme Development through access Projects with PS Support ProjectCountryDescription Cross RoadsUgandaCapacity building Policy reform (outsourcing) TAQAEthiopiaQuality Management System TA to UNRAUgandaModel Procurement Documents IEBBangladeshProfessional development (ICE)

71. Rural Access Programme Development through access ICE support to Bangladesh  Support to Bangladesh Institution of Civil Engineers  Professional Qualifications  Graduate training programme  Continuing Professional Development (CPD)  Working with Universities  Improve technical content  Broaden curriculum for engineers

72. Rural Access Programme Development through access Technical Assistance to Uganda National Road Authority  Improving performance of national road sector through contracts that include / require:  detailed TOR (requirements)  CD with all technical manuals, specifications etc.  Managing and sharing risk (time, quality, budget)  Promotion of national resources (incl. expertise)  Technical Audit  Transfer of Knowledge  Consultant QMS and Project Control Plan  Address Skills Gap – technical assistants, graduate development programme

73. Rural Access Programme Development through access Technical Assistance for Quality Assurance, Ethiopian Road Authority  Addressing poor quality services through Quality Management  Improved procurement & contract management by ERA  Clearly defined requirements for service providers  Compliance with legal and funding requirements  Training in QMS requirements  Auditing QMS implementation

74. Rural Access Programme Development through access Cross Roads - Goals Creating Opportunities for Sustainable Spending on Roads  Capacity Building  improve services,  create opportunities and competitive environment  Improved Government planning  long term planning,  adequate & consistent funding,  regulation,  continuous work opportunities

75. Rural Access Programme Development through access Cross Roads Approaches  Market System Approach  tackling underlying causes of market inefficiencies  Policy Reform  outsourcing to Private Sector,  dedicated Government agency & maintenance funds  Incentives  Construction guarantee fund: affordable credit for bid bonds, performance bonds, equipment  Challenge fund: develop innovative solutions to roads issues  Capacity Development  Support professional and industry associations to provide better services  Develop skills of association members

76. Rural Access Programme Development through access PRIVATE SECTOR IN NEPAL

77. Rural Access Programme Development through access Addressing Weaknesses Current WeaknessPossible solution Limited sense of professionalism and responsibility within engineering community Develop tiered registration within Engineering Council Develop formal professional qualification Develop graduate training programme Promote Continuing Professional Development Poor contract management by all parties Strengthen GON planning, procurement and contract management processes Improve contract documents, TOR Training in basic contract management Enforce contract penalties No incentive for good performance Develop appropriate incentives for individuals and organisations (awards?)

78. Rural Access Programme Development through access Addressing Weaknesses Current WeaknessPossible solution Poor resource planning and management Improve GON planning processes to better fit with construction seasons Ensure adequate resource provisions in contracts Training of managers in basic resource management (human, financial, physical) Poor quality management – poor end product Develop QMS for standard engineering processes Training in basic QMS

79. Rural Access Programme Development through access Weak to Strong Private Sector Poor performance Weak Sector Solutions to challenges Technical Management Business Environment Social and Political Good Performance Strong Sector

80. Rural Access Programme Development through access Thank you. The End.