1. Microenterprise-based routine road maintenance Adapting the Latin American model Serge Cartier The World Bank Guiyang – June 26, 2007

2. Overview General overview of routine road maintenance microenterprises Main aspects in introducing microenterprise- based routine road maintenance Adapting the Latin American model to the Chinese context

3. Routine Maintenance Microenterprises - Routine Maintenance - Preventative maintenance Delays the need for other complementary (and more costly) conservation measures 012345678012345678 Very poor Poor Fair Good Very good Without maintenance Routine maintenance Periodic maintenance Corrective maintenance

4. Routine Maintenance Microenterprises - Routine Maintenance - Peru rural roads YearWithout maintenanceWith maintenance 0RehabilitationUS$ 16,500RehabilitationUS$ 16,500 1Routine MaintenanceUS$ 700 2Routine MaintenanceUS$ 700 3Routine MaintenanceUS$ 700 4Routine MaintenanceUS$ 700 5RehabilitationUS$ 16,500 Routine Maintenance + Periodic Maintenance US$ 700 + US$ 3,000 TotalUS$ 33,000US$ 23,000 15,000 km under routine maintenance – US$ 150 million savings every 5 years Combination of routine and periodic maintenance most cost-effective option

5. Routine Maintenance Microenterprises - Microenterprises - Associative or cooperative form 10-15 people, generally from the vicinity of the road (except in the case of former road agency staff) Paid a fixed monthly sum (approx. US$ 1,000/km) (performance-based contract) Responsible for basic maintenance activities in a 15-50 km stretch of road Trained and supervised by contracting agency Complemented by other conservation activities

6. Routine Maintenance Microenterprises - Microenterprises - CountryNameStart#MEKMSurface Bolivia Servicio Nacional de Caminos - SNC 20033028,228Paved Colombia Instituto Nacional de Vías - INVIAS 198431814,157Paved Ecuador Unidad de Caminos Vecinales - UCV Ministerio de Obras Públicas - MOP Municipalidad de Azuay 2001 2003 1998 36 84 20 420 2,259 Unpaved Paved Unpaved Guatemala Unidad Ejecutora de Conservación Vial - COVIAL 19971304,200Paved Honduras Fondo Vial 2000702,762Paved Nicaragua Programa de Mantenimiento Rutinario por Microempresas Programa de Apoyo al Sector de Transporte – PAST 1997 1999 372,140Paved Unpaved Paraguay Programa Nacional de Caminos Rurales – PNCR 2000Unpaved Peru PROVIAS Rural PROVIAS Nacional 1996 2003 600 127 14,251 7,256 Unpaved Paved Uruguay Dirección Nacional de Vialidad - DNV 1996101,613Paved

7. Routine Maintenance Microenterprises - Results - Improved road conditions (transport costs, travel times, economic activities) Cost savings (50% of force account, less need for more costly measures) Impact local economies and incomes/employment (direct employment, indirect employment – consumption, other activities, etc.) Local capacity building (contracting, entrepreneurial, leadership skills, productive activities) Replication (other countries or areas, by national and subnational governments)

8. Overview General overview of microenterprise-based routine road maintenance Main aspects in introducing microenterprise- based routine road maintenance Adapting the Latin American model to the Chinese context

9. Main aspects - Introducing routine maintenance microenterprises - 1. Organisational modality 2. Microenterprise formation 3. Contracting modality 4. Tools and equipment 5. Maintenance activities 6. Performance indicators 7. Productivity rates and maintenance costs 8. Financing mechanisms 9. Training and accompaniment 10. Supervision

10. Main aspects - 1. Organisational modality - Microenterprise better performance than lengthmen Associative or cooperative form (All owners are workers, all workers are owners; better performance than single- owner) Inexpensive and swift constitution (non-profit modalities rather than enterprise modalities, simplified procedures) Change of members over time (non-profit modalities, profit as an incentive for better performance) Adaptation of existing legal modalities (enterprise modalities) Rotation of temporary workers

11. Main aspects - 2. Microenterprise formation - Communities in vicinity of the road (promotional team, different in case of former road agency staff) Community involvement (better cohesion and acceptance by community, more efficient and effective) Selection criteria – sustainability and acceptability (eligibility criteria: poverty, unemployment, household head, close to road ranking criteria: basic reading/writing, construction/maintenance experience) Female participation (<3% to 25-30%) (stereotypes and prejudices, mixed microenterprises better performance) Rotation of members and temporary workers (community resentment, core group of members + temporary workers, training)

13. Main aspects - 3. Contracting modality - Direct contracting (contract sum, private or public procedures with multiple bidders) Bank norms, subsequently national regulations (adaptation of legislation, training of staff and microenterprises) Performance-based contract (payment for output, not for input) Guarantees and securities (bid security, advance, satisfactory execution – size and modality) Simple documents (terms of reference, contract, report format)

14. Main aspects - 4. Tools & equipment - Handtools (machetes, wheelbarrows, pickaxes, shovels, axes, (sledge)hammers, rakes, hoes, garden scissors, brooms, earth rammers, crowbars, ropes, buckets, trowels, files, chisels, bow saws, paintbrushes, measuring tape) Supplies (sandpaper, paint, wooden planks, trash bags, cement) Safety equipment (first aid kit, safety vests, cones, signs, markers or chalk) Clothing (rubber boots, work boots, trousers, shirts, ponchos, masks, hats, gloves) Provision by road agency or advance

15. Main aspects - 5. Maintenance activities - Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders)

17. Main aspects - 5. Maintenance activities - Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes)

19. Main aspects - 5. Maintenance activities - Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways)

21. Main aspects - 5. Maintenance activities - Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways) Road works (Repairing retaining walls, cleaning and repairing bridge structures) Road signalling and safety measures (Cleaning, painting and maintaining traffic signs, road markers, guardrails and bridge railings, removing obstacles in the right-of-way)

23. Main aspects - 5. Maintenance activities - Road surface (Clearing the road surface, removing minor landslides, repairing and sealing cracks, joints, rills and ruts, patching potholes in pavement and shoulders) Right-of-way (Clearing the right-of-way, cutting grass and brush, trimming, cutting and removal of trees, removing loose material from slopes, stabilising slopes) Drainage system (Clearing and repairing culverts and inlets, clearing and repairing side drains, channels and other surface drainage structures, clearing small waterways) Road works (Repairing retaining walls, cleaning and repairing bridge structures) Road signalling and safety measures (Cleaning, painting and maintaining traffic signs, road markers, guardrails and bridge railings, removing obstacles in the right-of-way) Tasks set for each activity to ensure proper execution

24. Main aspects - 6. Performance indicators - Objective, inexpensive and easily measurable Road pavement and right-of-way Road surface and right-of-way should be free from obstructions, litter, debris and road kill Potholes should be non-existent or their amount and size should be below a certain minimum Vegetation in the right-of-way should not exceed a specified height No trees should obstruct traffic or visibility or pose a safety hazard Slopes should be free from loose material and should be stabilised using vegetative measures Drainage system Culverts free from debris and sediment or up to a maximum percentage of the cross section Surface drainage structures correct cross section and sediment or up to a maximum percentage Riverbeds should be clear for a certain distance from the edges of the road Road works Retaining walls should be structurally sound Bridge structures should be structurally sound and free from litter and debris Road signalling and safety measures Traffic signs, road signs and road markers should be complete, clean and clearly visible Guardrails and bridge railings should be clean, painted and clearly visible

25. Determine daily productivity rates for activities Determine work quantities per kilometre based on road characteristics Classify roads according to road characteristics (category, traffic, vegetation, topography, roadworks) Determine general productivity rates by road class (km/worker) Main aspects - 7.Productivity rates and maintenance costs - ActivityPeruEcuador TeamProductivityTeamProductivity Removing minor landslides39 m 3 /day310 m 3 /day Clearing side drains4480 m/day4700 m/day Clearing culverts and inlets32 units/day33 units/day Cutting grass + clearing right-of-way31200 m 2 /day3900m 2 /day Peru rural roads Road type Service level Road class Productivity rate (km/worker) I BIB5.0 AIA4.5 II BIIB3.5 AIIA3.0 III BIIIB2.5 AIIIA2.0 Colombia Road classProductivity rate (km/worker) I5.0 II4.0 III3.0 IV2.5

26. Main aspects - 7.Productivity rates and maintenance costs - Road class Productivity rate (km/worker) Cost (US$/km/year) SierraSelva IB5.0550510 IA4.5590550 IIB3.5720680 IIA3.0820770 IIIB2.51,020970 IIIA2.01,2001,150 Determine standard maintenance costs per km  Mainly labour – wages and general productivity rates (worker/km)  Tools & equipment, transport, insurances & pensions, administration, contingencies and profit Road classProductivity rate (km/worker) Cost (US$/km/year) I5.0885 II4.01106 III3.01475 IV2.51770 CountryAverage cost (US$/km/year)Road type BoliviaUS$ 800Paved ColombiaUS$ 885 – US$ 1,770Paved Ecuador US$ 800 - US$ 1,200Unpaved US$ 1,320Paved HondurasUS$ 1,050Paved Nicaragua US$ 600Paved US$ 400Unpaved ParaguayUS$ 800 - US$ 1,000Unpaved Peru US$ 510 - US$ 1,200Unpaved US$ 500 - US$ 1,000Paved

27. Main aspects - 8. Financing mechanisms - Sufficient and timely financing (survival of ME, execution of maintenance) External funding at start – national resources (responsible entity, financial capacity, budget priorities, legal restrictions) Secure allocation of financial resources (predictable financing, road funds or earmarking, taxes and tolls) Efficient payment procedures (delays maximum of 20 days, ME desertion)

28. Main aspects - 9. Training and accompaniment - Entrepreneurial training (how to work together + basic enterprise management, social promoter) Technical training (road elements + inventory, maintenance activities and performance indicators, technical promoter / training institute) Technical accompaniment (6 months-1 year) (assist in planning activities, assessing performance, consultants / university graduates / road management agencies) Entrepreneurial accompaniment (6 months-1 year) (enterprise management, accounting, taxes, consultants / university graduates) Other training (basic education, health issues, etc.)

30. Main aspects - 10. Supervision - Planned and informal visits (monthly – every few months, road users) Check performance indicators (general inspection, detailed inspection in sample stretch) Penalties (daily fine, deduction of monthly payment, continued failure - termination of contract, not always applied)

31. Main aspects - Example Peru rural roads - Since 1995, 14,251 km (total 46,909 km), over 600 ME 6000 permanent jobs, 49,000 indirect jobs, 10x productive investments Associations (some initial companies) Community involvement, female participation (2%-23%), 60% rotation system, 60% departure after 6 years (better job, internal conflicts) Direct contracting limits, private contracting 3 bidders, 25% ME in 2006 Performance indicators, grass < 45cm, potholes < 10/km, 20-30% sedimentation Productivity rates 2-5 km/worker, depending on road class (6 classes) Initially US$1,200/km, now US$510-US$1,200 80% wages; tools, transport, general, investments (no social security) Lack of resources municipalities, Provincial Road Institutes, earmarking Technical training SENCICO, university graduates for accompaniment Supervision by consultants

32. Main aspects - Example Ecuador rural roads - Since 2001 (1998 ILO), 420 km, 36 ME Lengthy procedures (1 year ILO), Civil Association, adaptation by ministerial decree, alternative of cooperative is closed modality Each entity can fix ceiling for direct contracting – US$35,000 (problem for paved network) Complicated contract documents US$800 – US$1,200 per kilometre per year 60% labour (US$160 minimum wage), 20% investments; rest tools, and administration (paved network insurance) 1st year 70% UCV, 2nd 30%, 3rd subnational governments fully responsible, but lack of funding Provincial engineer determines workplan, also carries out monthly supervision, ME feel like employees

33. Main aspects - Example Colombia paved roads - Since 1984 (ILO, UNDP), 14,157 km, 318 ME, 11,823 members Competitive bidding in some cases, due to sufficient bidders All ME members have to be accredited by SENA, which provides the technical training Patching material supplied by INVIAS Penalties 5%, 10%, 15% payment deducted, then contract terminated 3 classification criteria: drainage works (1: 10), vegetation (1: 5), type of terrain (1: flat, 2: hilly, 3: mountainous). Multiply for road class:(I:1-3, II:4-8, III:9-27, IV: critical road). Productivity rates 2.5 - 5 km/worker, US$ 885 - US$ 1,770/km per year Monthly training (technical, entrepreneurial and other subjects) Road administrators carry out technical accompaniment and supervision, as well as complementary road management activities (200km)

34. Overview General overview of microenterprise-based routine road maintenance Main aspects in introducing microenterprise- based routine road maintenance Adapting the Latin American model to the Chinese context

35. Adapting the Latin American model - Design steps - 1.Organisational modality Non-profit – enterprise modality (associative form)? Closed – open (temporary workers)? Existing legal modalities ? Administrative procedures? 2.Microenterprise formation Selection criteria? Promotional team? Gender aspects? Rotation and temporary workers?

36. Adapting the Latin American model - Design steps - 3.Contracting modality Possibilities for direct contracting? Required guarantees (sizes and accepted forms)? Appropriate contract documents 4.Tools & equipment Requirements and local availability? Estimated costs? Contract advances or provision by road agency?

37. Adapting the Latin American model - Design steps - 5.Maintenance activities Which activities are to be included (budget, type of road)? Description of tasks Complementary conservation measures? 6.Performance indicators Appropriate indicators (maintenance activities, budget)? Penalties to be applied?

38. Adapting the Latin American model - Design steps - 7.Productivity norms and maintenance costs Local daily productivity rates by activity (?) Main road characteristics and their influence on work quantities? Road classes and classification criteria? General productivity rates by road class (km/worker)? Wage rates and additional costs & allowances? Standard costs by road class? 8.Financing mechanisms Appropriate financing entity? Availability and secure allocation of financial resources? Payment procedures?

39. Adapting the Latin American model - Design steps - 9.Training and accompaniment Training material Who will execute training and accompaniment activities? Training of trainers Accompaniment – Supervision? 10.Supervision Who is responsible for (supervising) the roads? Supervisors?

40. Initial Questions Which entity is the contracting agency? (Promotion, Contracting, Financing, Training, Supervision) What are the main road characteristics? (surface, categories, traffic, topography, vegetation, road works) Is there sustainable and secure funding? Thank You!