for official use only -...

CIRCULATING COPYDocument of

The World Bank TO BE RETURNED TO REPORTS DESK

FOR OFFICIAL USE ONLY

Report No. 1197

PROJECT PERFORMANCE AUDIT REPORT

on

FINLAND: THIRD HIGHWAY PROJECT (LOAN 723-FI)

June 8, 1976

Operations Evaluation Department

This document has a restricted distribution and may be used by recipients only In the penormance ortheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

FOR OFFICIAL USE ONLY

TABLE OF CONTENTS

Page No.

Basic Data Sheet

Highlights

PROJECT PERFORMANCE AUDIT MEMORANDUM 1-4

Attachment: PROJECT COMPLETION REPORT A.1

A. Background A.1

B. Purpose and General Description of the Project A.1

C. Design A.2

D. Award of Contracts A.2

E. Construction A.3

F. Supervision of Construction A.3

G. Comparison of Final Costs and Appraisal Cost Estimate A.4

H. Disbursements A.4

I. Project Covenants A.5

J. Economic Analysis A.5

K. Conclusions A.7

Annexes

I. Project CostsII. Road Construction and Supervision Costs for the

Tattariharju-Jarvenpaa ExpresswayIII. Road Paving ContractsIV. Organization for Supervision of Tattariharju-Jarvenpaa

Expressway ConstructionV. Total Disbursements

VI. Public Roads Maintenance Budget, 1962-75VII. Average Annual Daily Traffic Volumes in the Tattariharju-

Jarvenpaa Corridor, 1974-2003VIII. Annual Traffic Growth Rates for Expressway, 1970-2003

IX. Vehicle Operating and Time Costs, 1974X. Estimated Vehicle Operating Costs in the Tattariharju-

Jarvenpaa Corridor

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Table of Contents (Cont'd.)

Annexes

XI. Rates of Return of ExpresswayXII. Rates of Return of Expressway Sections

XIII. Road Paving ProgramXIV. Road Paving ProgramXV. Road Paving Program

Maps

A. Third Highway ProjectB. Detail of Expressway WorksC. Detail of Paving WorkD. Average Daily Traffic, 1975

Currency Equivalent -- Finnish markkaa (Fmk)

1971 US$1 = Fmk 4.151972 US$1 = Fmk 4.181973 US$1 = Fmk 3.841974 US$1 = Fmk 3.561975 US$1 = Fmk 3.85

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET


As of December 31. 1975

(Amounts in US$ m1n)

Original Disbursed Cancelled Repaid Outstanding

Loan 723-FI 13.0 13.0 - 1.5 11.5

Project Data

Original Plan Revisions Actual

Conception in Bank/a - 5/68

Board Approval 3/70 2/71 2/9/71

Loan Agreement 3/70 - 2/17/71

Effectiveness 5/17/71 - 5/14/71

Physical Completion 11/73 12/73

% of Original ProjectCompleted by Date Shown Above 99% -100%

Loan Closingb /c 6/74 - 6/74

Total Costs (US$ min) - 39.0 - 45.0

Economic Rate of ReturnExpressway 17% - 21%

Paving 30% - higher than 30%

Mission Data

Month, No. of No. of /d Date of

Year Weeks Persons Manweeks- Report

Appraisal 5/69 1.7 3 5.1 12/69-

Reappraisal 9-10/70 1.3 2 2.6 1/28/71

Subtotal 3.0 7.7

Supervision I 5/71 1.0 1 1.0 7/23/71

Supervision II 7/72 0.7 1 0.7 7/27/72

Subtotal 1.7 1.7

/a Date of Conception in Bank is date Bank first recorded project was being con-sidered for financing and began to follow up that decision in a serious continuousway (Project Negotiations or Country General Files).

/b Actual Loan Closing Date is date of last disbursement out of the loan account asgiven by Controller's Department.

/c Appraisal costs include contingencies. Also included is the cost of land acquisi-

tion, construction, supervision and project preparation which were borne by the Government.

/d Based on seven-day field week.

/e Yellow cover.

PROJECT PERFORMANCE AUDIT MEMORANDUM


HIGHLIGHTS

This is the third loan to a competent, well managed borrower, theNational Bureau of Roads and Waterways (NBR). The projects financed were

well executed. The Bank's main contribution has been to introduce thepractice of contracting out large construction works previously designed

and executed by the NBR itself. The experience also indicates the importanceof appraising large highway projects by sections so that parts with lowpotential returns may be deferred.

The following points may be of particular interest:

Advantages of contracting out highway construction works

(para. 3)

Importance of time savings in economic justification

(para. 7 and PCR para. 31)

Need for economic analysis by road section (paras. 9 and 10and PCR para. 34)

Useful Bank advice to include escalation clause in contracts(para. 13).

PROJECT PERFORMANCE AUDIT MEMORANDUM


1. This memorandum reports on an audit of performance under theFinland Third Highway Project, for which Loan 723-Fl of February 17, 1971,in the amount of US$13 million was closed in June 1974. The performance

audit is based on information contained in the attached Project CompletionReport (PCR), prepared by the Bank's Europe, Middle East and North AfricaRegional Office, which we found to be satisfactory. This has been supple-mented by information contained in Bank files and discussions with Bank staffinvolved with the appraisal and supervision of this project.

2. The Third Highway Loan financed the foreign exchange component ofconstruction of a 22 km, four-lane divided expressway (including five inter-changes and 36 km of approach roads) between Tattariharju and Jarvenpaa,linking Helsinki, the capital, with central and northern Finland, and pavingof about 910 km of roads (Attachment, Maps A and C). Through two previoushighway loans, 384-Fl of 1964 for US$28.5 million and 445-FI of 1966 forUS$20.0 million, the Bank played an important role in assisting the Governmentof Finland in its efforts to improve road transport and modernize the organiza-tion responsible for roads, the National Bureau of Roads and Waterways (NBR)(Attachment, A.1).

3. Perhaps the Bank's most important contribution to the NBR's rapidand successful development under the First and Second Highway Projects wasthe introduction of international competitive bidding for large-scale con-struction contracts. In the early 1960s, the NBR carried out most design andconstruction itself; this undertaking, combined with a shortage of staff hadlimited its capacity to prepare and execute the work required to bring theroad network to modern standards. International competitive bidding releasedNBR's staff to concentrate on modernizing the road network and also substan-tially reduced construction time and costs. Other factors contributing toNBR's success included the restructuring of the Government's transport planningoperations and the presence within NBR of strong management and well-qualified,experienced staff whose creativity and flexibility facilitated the adoption ofnew methods into the organization.

4. The Government first approached the Bank in connection with theThird Highway Project in 1967, but the loan was not signed until 1971. The1967 approach was turned down because of a shortage of Bank funds. In 1968the Bank agreed to support the project and appraised it in May 1969. Butfurther processing was postponed a year because limited allocations forinfrastructure projects prevented the Ministry of Finance from including theproject in the budget. By September 1970 budget funds were available and theproject was-reappraised. Some minor modifications were made to the expressway'salignment by the NBR based on recommendations made by communes and interestedgroups (Attachment, A.2), and the loan was signed on February 17, 1971.

- 2 -

5. Implementation of this project was smooth. Paving works were completed

on schedule in 1971 and the expressway was completed only one month behind

schedule, in December 1973. The quality of this work was good.

6. The total project cost is US$45 million compared with US$39 million

expected at appraisal:

Appraisal Cost Actual Costs asEstimate Includ- Actual a Proportion ofing Contingencies Cost Estimated Costs------- US$ million ------- %

Expressway Construction 28.3- 36.4 129Paving Works 10.7 8.6 80

Total 39.0 45.0 115

/a Includes the cost of construction, land acquisition, project prepara-tion and construction supervision.

The 29% overrun for the expressway is explained mainly by substantial priceescalations while the 20% cost underrun for the paving works is explained bythe overestimation of these costs at appraisal.

7. The purpose of the Tattariharju-Jarvenpaa Expressway was to alleviateserious traffic congestion on a parallel road, Main Road 4-5, and to meet theincreasing demand for road transport facilities (Attachment, Map B). Theexpected rate of return at appraisal was 17% and the rate of return at audit(estimated in the Attachment) is 21%. The justification of the project atappraisal and at audit is mainly due to the inclusion of time savings. Thesesavings account for a considerable portion of the vehicle operating costsavings for light vehicles and for heavy vehicles (Attachment, Annex IX). Atappraisal time savings were conservatively estimated, with the value of thesesavings for drivers of trucks and buses being considered equal to their salarieswhile the value for passengers being considered at US$.39/passenger/hour. Thisvalue for passenger travel was only one-third of the hourly wage of users andwas also about 20% lower than estimated by transport users sampled in thegreater Helsinki area who were queried on how much they would pay in order tosave transport/travel time.

8. The higher rate of return at audit (estimated in the Attachment) isexplained by the benefits arising from the unexpected diversion of trafficfrom the Tuusala Road, a road west of and parallel to the expressway, and byhigher vehicle operating cost savings following the increase in petroleumprices. As a result of this traffic diversion, the combined traffic on theexpressway and Main Road 4-5 in 1974 was about 11% higher than forecast:

Section Section Section OverallI II III Average I-III

-----------------vehicles per day----------------

Forecast n.a. n.a. n.a. 13,321Actual 20,990 14,470 9,800 14,821

-3-

If the benefits from the diversion of traffic are excluded, the audit rateof return declines from 21% to 18%, which is only marginally above theappraisal estimate (Attachment, Annex XI).

9. The rates of return at audit for each of the three sections intowhich the expressway has been divided show that while investment in the firsttwo sections, with rates of return of 24% and 35%, was clearly worthwhile,investment in the third section, with a rate of return of 5%, was not as worth-while (Attachment, Annex XII). The third section, 7.4 km between Kerava andJarvenpaa accounted for about 28% of the total expressway cost. At appraisal,benefits arising from interchanges such as time savings during rush hour,reduction in driving time from Helsinki to Jarvenpaa and savings to througheast-west traffic were not included in the rate of return calculation for thissection. The Government has pointed out that these savings are considerableand that the investment made in the interchanges on the third section comprisedabout 15% of the total cost of the section. However, even if these additionalbenefits are included, the rate of return improves only slightly from 5% to 8%.

10. The lower than expected rate of return for the Kerava-Jarvenpaasection results from the low volume of traffic. Traffic is considerably lowerthan on sections close to Helsinki, representing about 39% of the traffic onthe first section and about 60% of the traffic on the second. The Governmentexpects that traffic on this section will increase in the near future becauseof expected developments in the region of Kerava-Jarvenpaa comparable to thedevelopment which has occurred farther south between Tattariharju and Kerava,since the loan was signed. It is not possible to compare actual traffic on theKerava-Jarvenpaa section with the appraisal forecast because the project wasappraised as a unit rather than in sections (Attachment, Annex VII). But basedon available information, it does not seem the Kerava-Jarvenpaa section wasnecessary to generate traffic for the other two sections. Consequently, theexpressway which eventually was to be extended beyond Jarvenpaa to Lahti,Finland's fourth largest city, could have terminated south of Jarvenpaa andthe overall rate of return of the project would have been higher. If the Bankhad appraised this project in sections, the investment on the Kerava-Jarvenpaasection (about US$10.4 million) might have been postponed. But this cannot befirmly concluded since appraisal counts commensurate with those between theinterchanges of the new expressway were not available.

11. The PCR has not reassessed the ex-post rates of return for the 910

km of roads paved in this project, which were expected to contribute to the

upgrading of the road network, as only partial traffic data were available at

writing. The growth of traffic on the paved sections, however, has been in

line with appraisal expectations and construction costs are 20% lower than

expected so the rate of return at audit should be higher than the 30% rate of

return expected at appraisal. Additional traffic data, which were received in the

Bank after the PCR had been prepared, confirmed the validity of this conclusion.

12. The Bank's role in the supervision of this project was minor. Two

supervision missions visited Finland and no further missions were required.

The supervision provided by the NBR and its district office at Usimaa was good,

and the minor problems which arose (Attachment, A.4) were handled expeditiously.The effectiveness and competency of the NBR influenced the favorable outcome

of this project.

-4-

13. The Bank made considerable efforts in this project to further improveinternational competitive bidding procedures introduced under the First andSecond Highway Projects. It instigated early discussions about procurement sothat alternatives could be explored; consequently, contracts were awardedpromptly. The Bank also had a positive impact on the project's outcome byinsisting that a price escalation clause be included in the contract for theexpressway works. The Government had included this clause in the contractsfor the two earlier loans, but had hesitated to incorporate it into the con-tract for this project because prices had been stabilized. The Bank'sinsistence was prudent, in retrospect, considering that construction pricesincreased by 27% between 1971 and 1973.

ATTACHMENT

FINLAND

PROJECT COMPLETION REPORT

LOAN 723-FI - THIRD HIGHWAY PROJECT

A. Background

1. The First Highway Loan of US$28.5 million (384-PI) was signed in1964 and helped finance:

(a) the construction of 14.3 km of a four-lane divided expresswaybetween Gumbole and Veikkola to the west of the capital, Helsinki(see Map A);

(b) a two-year paving program (1964-65);

(c) the purchase of road maintenance equipment; and

(d) a transportation study by foreign consultants which reviewedthe transport sector, recommended improvements for each trans-

port mode and for transport policy and coordination, andformulated a ten-year investment program.

2. The Second Highway Loan of US$20 million (445-FI) was signed in 1966and was based on the consultants' study in A 1(d) above; it contributed towards:

(a) the construction of 12.2 km of a four-lane divided expressway betweenTampere and Kulju (see Map A);

(b) the 400 metre long Savonlinna bridge;

(c) a tow-year paving program (1966-67); and

(d) detailed engineering by local and foreign consultants for high

priority expressway sections that were to be constructed later.

B. Purpose and General Description of the Project

3. The Third Highway Loan of Us$13 million (723-FI) was signed onFebruary 17, 1971; its purpose was to finance the foreign exchange componentsof:

(a) the construction of about 22 km of four-lane divided expresswaybetween Tattariharju and Jarvenpaa, including five interchangesand about 36 km of approach roads (Maps A and B); and

(b) the paving of about 910 km of roads from the Borrower's 1971paving program (Map C).

The loan became effective on May 14, 1971.

- A.2 -

C. Design

Expressway

4. The detailed engineering was satisfactorily and comprehensivelycarried out by consultants in the preceding highway loan (see para A 2(d)above).

Modifications of Design

(i) The National Bureau of Public Roads and Waterways (NBR) agreed toa request from Jarvenpaa Town Council for the construction ofthree underpasses on Highways 13 and 15 and an intersection bridgeon Highway 15 under the expressway contract. The additional work,which complements the expressway design, was paid for by the townof Jarvenpaa.

(ii) Vantaa Town Council paid for:

(a) the realignment of the eastern end of local road P11 owingto a change of land use in the Hakunila area; and

(b) the widening of two expressway bridges to cater for trafficto and from the town.

(iii) Other minor design variations were adopted to cope with site andmaterial exigencies.

Paving Works

5. The detailed engineering for the paving program was competentlycarried out by NBR staff, as was the case for the paving works included in thetwo previous highway loans.

D. Awards of Contracts

Expressway

1/6. After international and local advertisement, seventeen contractorswere prequalified for the expressway, interchanges and approach roads con-struction which was divided into three contract segments for which bidderscould tender for parts or for the whole.

7. After in rnational competitive bidding, to which nine prequalifiedbidders responded,- Contract I was awarded to a joint venture, Tiefundamentti/Bergendahl & Hochert (Finland/Sweden) and Contracts II and III to Lemminkainen(Finland). Accepted bids are compared with appraisal estimates and final ex-penditures in paragraph G and Annexes I and II.

1/ 9 Finnish, 1 Swedish-Finnish, 3 Swedish, 1 English, 1 German, 1 Italian and1 Yugoslav.

2/ 7 Finnish, 1 Swedish-Finnish and 1 Yugoslav.

- A.3 -

Paving Works

8. The loan agreement describes approximately 910 km of roads forpaving grouped into 26 contracts in six regions. In April 1971 an NBRletter appeared to recommend awards for 23 of 26 contracts and force accountwork for the remaining three. A Bank supervision mission in July 1971elucidated that 30 contracts were put out to international competitivetender and 3 of these would be executed by NBR force account thereby be-coming ineligible for Bank financing. The Bank confirmed its acceptanceof 27 contracts in a letter to the Borrower dated July 20, 1971.

9. After prequalif ation procedures- and international competitivebidding had been followed- , all 27 paving contracts were awarded to sevenFinnish contractors.

10. The total of the tender sums was below the appraisal estimate(Annexes I and III).

E. Construction

Expressway

11. Construction work on all contracts began as scheduled in June 1971.Minor delays during construction arose due to:

(i) some reinforced concrete piles having insufficient concrete coverover the reinforcement, requiring re-casting of piles to replacethose found defective;

(ii) inclement working conditions in Autumn 1971 and Spring 1972; and

(iii) labour disputes with supervising technical staff in Summer 1973.

12. The slight delays from (i) and (ii) above were made up during theconstruction period. Contract periods were extended by one month fromOctober 31 to November 30, 1973 due to labour disputes - see (iii) above.

13. The practical completion date for both contracts was December 1, 1973(Contract I) and December 20, 1973 (Contracts II and III). The Tattariharju-Jarvenpaa expressway section was officially opened by the Minister for Trafficon December 10, 1973.

Paving Works

14. Work began in May-July 1971 and all contracts were completed satis-factorily within the 3-5 months contract periods before the onset of Winter 1971.

F. Supervision of Construction

Expressway

15. NBR assigned supervision duties to Uusimaa District Bureau, its localdistrict representation. The organization of the supervision is given in

1/ 20 Finnish, 1 Italian, 1 Swedish, 1 Yugoslav.2/ Only one foreign firm (Yugoslav) submitted bids.

- A.4 -

Annex IV; it was largely autonomous and only referred major issues to NBRfor decision. The supervisory arrangements were satisfactory and flexible;contract administration, measurements, accounting and quality control weregood.

Supervision costs were:

Contract I Fmk 1,911,205 (US$0.45 million)or 4.9% of the completion cost

Contracts II & III Fmk 4,033,426 (US$0.97 million)or 5.2% of the completion cost

The total cost of supervision was 5.1% of total completion cost.

Paving Works

16. Supervision was carried out effectively by NBR district repre-sentatives and supporting staff.

17. All supervision costs were borne by the Borrower and were notcharged to the loan account.

G. Comparison of Final Costs and Appraisal Cost Estimates (see Annex I)

Expressway

18. Accepted bids were 15% higher than the appraisal estimate excludingcontingencies. If contingencies are considered, accepted bids were within theappraisal estimate. Final costs were 23% higher than accepted bids.

19. The official Finnish Road Construction Cost Index rose from 165 inthe first quarter of 1971 (time of bids) to 236 in the last quarter of 1973(time of completion); a rise of 43%. Cost increases due to the index risewere 19% of the combined tender sums for Contracts I, II and III.

20. Alterations to design and additional works accounted for 4% ofthe increase above the combined tender sums for the three contracts.

Paving Works

21. The final cost of the paving works was 17% below the appraisalestimate, excluding contingencies.

H. Disbursements

22. A comparison of actual disbursements and those estimated at appraisalis given in Annex V. The Bank disbursement rate was reduced from 35% to 28%for works carried out after March 31, 1973 so that the Bank could continue toparticipate in the project until the end of expressway construction.

- A.5 -

23. The loan was fully disbursed by June 20, 1974 or six monthsafter the appraisal estimate. The Closing Date of the loan remainedunchanged at June 30, 1974.

I. Project Covenants

24. The "Guidelines for Procurement under World Bank Loans and IDACredits" were followed.

25. Financial control of the project was managed efficiently by theUusimaa District Office supervision staff, a local branch of the NBR, andadequate records were kept to show the operations and financial conditionof the project.

26. The Borrower continues to provide adequate funds, facilities, ser-vices and other resources to NBR for the maintenance, in accordance with soundengineering and highway practices, of all the roads and bridges of its publicroad network (see Annex VI).

27. Vehicle dimensions and axle loading regulations are satisfactoryand are enforced by the Borrower's police authorities to ensure that designloadings are not exceeded.

28. The Ministry of Communications and NBR collect and process datarelated to traffic and the road network for planning and maintenance purposes.

29. All ancillary works, not included in the project but necessary forthe completion of the project, were executed by the Borrower to ensure thetimely completion of the project.

J. Economic Analysis

Expressway

30. The purpose of construction of the expressway was to alleviatecongestion on the present main road (Road 4-5) and to meet the increaseddemand for road transport in the corridor between Helsinki and Lahti, twoof Finland's most important centers of population and industry. Withoutthe new facility, the expected future traffic demand between Tattariharju-Jarvenpaa could not be met. The average traffic volumes by section on theexisting roads in the corridor between Tattariharju and Jarvenpaa and onthe expressway from actual counts in 1974 and projected through the lifeof the expressway are shown in Annex VIII and Map D. Average actual trafficon the expressway is about 30% above the estimated volumes, mainly due tounforeseen traffic diversion from the Tuusula road running from Helsinki viaTuusula to Jarvenpaa parallel to and west of the expressway.

31. The principal benefits derived from the project are savings invehicle operating costs and in passenger time costs, of which the latterconstitute about 45% of the total transport cost. Overall transport costsare shown in Annex IX as estimated at appraisal and as revised on the basisof information supplied by the Government in September 1975 and missionestimates based on indices from the official Finnish Bulletin of Statistics.

- A.6 -

The Annex shows that the average vehicle operating cost, and thereforesavings, have increased by an average of 70% from 1971 to mid-1974; thisincrease is partly due to inflation (50%), partly due to recent producerprice increases in petroleum products (20%). Transport cost by roadsection on the existing roads and the expressway in the Tattariharju-Jarvenpaa corridor are shown in Annex X.

32. The cost of construction, supervision and project preparation,used for the economic evaluation were converted into 1974 prices on thebasis of the construction price index for Finland. The resulting cost ofconstruction, supervision and project preparation in 1974 prices (Annex I)are about 19% higher than those used in the economic evaluation of theappraisal report.

33. The overall economic return (ER) of the project road are shownin Annex XI as estimated at appraisal and as revised on the basis of updatedtraffic and vehicle operating cost information. Two revised estimates havebeen calculated: (a) the first revised estimate excludes savings in costof traffic diverted from the Tuusula road to the expressway, aid is thereforedirectly comparable to the ER of the appraisal report; and (b) the secondrevised estimate includes savings in cost of traffic diverted from theTuusula road to the expressway, and therefore shows the ER of the projectroad in terms of savings to total corridor traffic. The Annex shows thatcompared to the appraisal estimate of 17%, the revised ER is 18% if savingsin cost of traffic diverted from the Tuusula road to the expressway are ex-cluded, and 21% if these savings are included. The respective opening yearreturns are 10% and 15%. This confirms that the project is economicallyjustified.

34. The ER's on each project road section, taking into considerationsavings and cost of traffic diverted from Tuusula road to the expressway, areshown in Annex XII. The Annex shows that of the three sections, one sectionhas a significantly lower ER than the average: the ER of 5% over a 30-yearperiod and an opening year return of 1% indicates that construction of thissection could have been postponed well into 1980's. Since appraisal of thisproject sectional analysis of highway projects, where appropriate taking intoaccount corridor effects, has become standard procedure for appraisals.

Paving Works

35. The program includes paving works on about 910 km of roads during1971. The objective of the program was to upgrade the wearing surfaces ofexisting highway sections where rapidly increasing traffic levels wouldotherwise have resulted in unduly high maintenance and vehicle operatingcosts. The principal benefits derived from the paving program would bereduced vehicle operating costs due to smoother road surfaces and improvedoperating characteristics. On the basis of information provided by theGovernment in September 1975, samples shown in Annexes XIII, XIV and XV,the average reduction in vehicle operating costs on the various road sections

included in the paving program was estimated at 10% or as estimated in theappraisal report. All paving works were carried out in 1971 and all roads

- A.7 -

were opened to traffic in that year. The total cost of the paving programwas about 17% below estimated cost. Information on traffic growth wasavailable for only a limited number of roads included in the program, butfrom the information received, average traffic growth appears to be about5% - 8%, as estimated in the appraisal report. The economic return of 30%for the paving program estimated in the appraisal report would thereforeprobably be enhanced. This confirms that the pavement program is economicallyjustified.

K. Conclusions

36. The main benefit from expressway construction are savings intransport cost. The ER is now estimated at 21% inclusive of savings inpassenger time compared to an appraisal estimate of 17%. The overall econo-mic justification of the expressway project is therefore confirmed; theimprovement of the section between Kerava and Jarvenpaa, however, shouldhave been postponed, since traffic in the opening year does not economicallyjustify construction of this section until well into the 1980's.

37. The main benefits from the road paving program are savings intransport cost. It was not possible to estimate the overall economic returnof the road paving program, but with paving costs lower than estimated, andsubstantially unchanged assumptions for savings in transport cost and growthin traffic, the economic justification of the paving program would be improvedover that shown in the appraisal report.

38. Other main benefits have been that experiences in contract super-vising and in settling contractors' claims have been useful to both the localcontracting industry and the NBR.

Europe Middle East and North Africa Regional OfficeOctober 10, 1975

ANNEX I

FINLAND

THIRD HIGHWAY PROJECT - LOAN 723-Fl

Project CostaL

Length Works SpecifiedContract Description km Appraisal Estimate Accepted Bid in Contract Final Cost/

3

A. EXPRESSWAY

I Tattariharju - Jarvenpan 6.5 /2 Fmk 30,994,890 Fak 31,841,780 Fmk 39,138,647Ch 7300-13800

II & III Tattariharju - Jarvenpan 16.1 /2 Fak 64,273,720 Fuk 63,177,134 Fak 78,393,247Ch 13800-29900

All 22.6 Fak 84,600,000 Fak 95,268,610 Fak 95,018,914 Pk 117,531,894

US$ 20,100,000 US$ 23,150,272 US$ 23,089,596 US$ 28,560,250

Appraisal Estimate - (100) (100) (115) (112) (142)

Accepted Bid - (100) - (100) (100) (123)

Works Specified in Contract - (100) - - (100) (124)

B. PAVING CONTRACTS

All 910 Fmk 43,500,000 Fmk 39,300,000 Fbk 39,300,000 Fik 35,900,000

US$ 10,400,000 US$ 9,400,000 US$ 9,400,000 US$ 8,600,000

Appraisal Estimate - (100) (100) (90) (90) (83)

Accepted Bid - (100) - (100) (100) (91)

Works Specified in Contract - (100) - (100) (91)

/1 Exchange rate used Imk 1 - US$0.243, equivalent to average of US$1 = Fmk 4.18 (January 1971) and Fmk 3.71 (September 1973).

/2 No breakdown available.

/3 Breakdown of final cost of expressway construction is as follows:

Contract I Contract II & III TotalAmount Index Amount Index Amount Index

Works Specified in Contract 31,841,780 100 63,177,134 100 95,018,914 100Additions and Alternatives 817,966 2.6 2,675,828 4.2 3,493,794 3.7Index Increases 6,206,745 19.5 11,995,676 19.0 18,202,421 19.1Extra Payments after Final Inspection 272,156 0.9 544,609 0.9 816,765 0.9(Clause 31 of General Conditions ofContract)

Fmk 39,138,647 123.0 78,393,247 124.1 117,531,894 123.7

Source: National Board of Public Roads and Waterways.

October 1975

FINLAND

THIRD HIGHWAY PROJECT - LOAN 723-FI

Road Construction and Supervision Costs for the Tattariharju - Jarvenpaa ExpresswayLl(Fmk million)

TotalLRight-of-Way Local Road Project/2 With WithoutSection Km Constructio./2 Acquisition Supervision Connection/2 Preparation Taxes Taxes

Section I

Tattariharju 10.2 Part 1 Tattariharju - Vaarala 25.7 4.5 0.9 1.5 1.1 33.7 29.5(Jakomaki) - KorsoPart 2 Vaarala - Kuninkaanmaki 13.8 1.5 1.0 1.5 0.6 18.4 16.0

Part 3 Kuninkaanmaki - Korso 26.2 3.5 1.0 2.0 1.1 33.8 29.4

65.7 9.5 2.9 5.0 2.8 85.9 74.9

Section II

Korso - Kerava 5.0 Part 4 Korso - Kerava 16.2 2.0 1.2 0.8 0.6 20.8 18.2

Section III

Kerava - Jarvenpaa 7.4 Part 5 Kerava - Jarvenpaa 36.9 2.5 1.8 0.3 1.6 43.1 37.3

Total 22.6 Tattariharju - Jarvenpaa 118.8/1 14.0 5.9 6.1 5.0 149.8 130.4

/1 Inclusive of costs of right-of-way and project preparation.

/2 Contract I Fmk 39.1 millionContract II & III Fmk 78.4 "Lightweight Gravel (purchased by Government) Fmk 1.3

Fmk 118.8 "

Expenditures incurred as follows: 1971 - 20%1972 - 50%1973 - 30%

/3 Local taxes element assumed to be 15% of construction, commune and preparation costs.

Source: National Board of Public Roads and Waterways.

October 1975

Annex III

FINLAND

THIRD HIGHWAY PROJECT LOAN 723-FI

Road Paving Contracts

Total Contract SumContract Contract with Bank

No. Contractor Sum Participationl/(Fmk) (Fmk)

I. A Asfaltek Oy 1,703,b1.00 116h6,328.00B Oy Cultor 1,452,7.00 1,A52,75.00C Asfaltor Oy 1,390,AU.00 1,191,24L.00D Valtatie Oy 2,901,A30.00 2,901,130.00E Valtatie Oy 887,125.00 589,170.001H Lemminkainen Oy 2,0L2,L50.00 1,941,855.00I Asfaltor Oy 802,97h.00 586,80500

II. A Asfalttikeskus 1,671,386.00 1,071,204.00B Valtatie Oy 1,622,88.00 1,58o,796.00C Oy Cultor 2,115,734.20 2,063,090.00D Oy Cultor 1,349,713.00 1,3h1,717.00F Tehoasfaltti 652,460.00 652,460.00G Oy Viarecta Ab 1,153,650.00 1,100,330.00

III. A Oy Viarecta Ab 742,0 6b.00 7L2,06h.00B Pikikivi Ky 1,651,5b0.80 1,555,o%5.00C Valtatie Oy 2,000,263.00 2,000,263.00D Pikikivi Ky 1,097,969.00 1,398,273.00E Asfaltor Oy 1,275,989.10 1,181,381.00

IV. A Oy Cultor 1,559,521.00 1,77,7h8.00B Asfaltor Oy 1,791,358.00 1,563,180.00C Asfaltor Oy 1,551,5h5.00 1,247,699.00

XI. A Asfaltor Oy 1,145,01.50 1,113,52L.00B Asfaltor Oy 1,329,563.96 820,089.00C Asfaltor Oy 1,169,960.00 1,161,835.00

XIII. A Asfaltor Oy 1,065,56b.00 1,006,730.00B Kestotie 1,665,h86.88 1,639,062.00C Oy Cultor 1,107,85.50 8b0,1hl.oo

Total Fmk 39,299,16 .9b 35,865,938.00

US$ million 9.h 8.60

1/ Differences between Contract Sum and Contract Sum with Bank participationrelated to scattered, minor works with cold-type asphalt which was notincluded in the project as the work could not be grouped into significantlysized contracts. Bank participation was at L5% of contract sum with Bankparticipation.

Source: National Board of Public Roads and Waterways

,October 1975

FINLAND


Organization for Supervision of Tattariharju-Jarvenpaa Expressway Construction

National Board ofPublic Roads and

Waterways(NBR)

Control Chiefj

Administration Bridges Laboratory Road Construction Contract

1 Chief Technician 2 Engineers 1 Chief Technician 1 Engineer

(Work Planning) 4 Senior Technicipns 5 Technical Assts. 2 Chief Technicians

1 Senior Technician 1 Senior Technician 1 Senior Technician

2 Draftsmen (measurement) 1 Foreman

1 Accountant 1 Foreman (measurement) 3 Technical Assistants

2 Clerks 2 Foremen (measurement)

1 Telephone Operator 3 Laborers

1 Caretaker2 Drivers

/1 One unit for each of three construction contracts.


October 1975

ANNEX V

FINLAND


Total Disbursements

Bank Accumulated DisbursementsFiscal Year (Million Us$ Equivalent) Actual Disbursements

and Actual Total Appraisal as % ofQuarter Disbursements Estimate Appraisal Estimate

1970/711st2nd3rdhth 1.5 0%

1971/721st 1.609 4.4 37%2nd 4.801 6.9 70%3rd 5.792 8.0 72%hth 6.636 9.1 73%

1972/731st 7.h2 10.h 72%2nd 8.168 11.1 74%3rd 9.711 11.6 8U%4th 10.627 12.2 87%

1973/741st 11.125 12.8 87%2nd 11.906 13.0 92%3rd 12.924 99%4th 13.000 /1 100%

/1 Final Withdrawal Application, No.15, disbursed June 11, 1974.S-urce: Mission EstimatesOctober 1975

ANNEX VI

FINLAND


Public Roads Maintenance Budget, 1962-75

Average YearlyMillion Fmk Length of/l Expenditures

Year Allocation Expenditure Network km Fmk/km

1962 114.5 114.5 45,322 2,526

1963 128.0 126.2 52,3h 2,411

196L 140.0 139.3 59,651 2,335

1965 165.0 159.1 64,645 2,461

1966 170.0 169.3 67,520 2,507

1967 180.0 178.9 69,263 2,583

1968 190.0 189.7 70,190 2,703

1969 204.0 203.0 71,048 2,857

1970 221.6 220.4 71,870 3,067

1971 255.0 255.0 72,339 3,525

1972 310.0 308.5 72,745 4,241

1973 350.0 349.0 72,916 4,786

1974 h53.o 453.0 73,209 6,188

1975 5h0.0 540.0 /2 73,342 7,363

/1 As of January 1.7- Estimated


October 1975

ANNEX VII

FINLAND


Average Annual Daily Traffic Volumes in the Tattariharju - Jarvenpaa Corridor, 1974-2003

Actual Projected

Road Section 1974l1 1974-T2 1979 1984 1989 1994 1999 2003

Main Road 4 - 5

I. Light Traffic 14,400 2,200 3,900 5,700 7,800 10,600 14,200 17,900

Heavy Traffic 3,000 550 760 960 1,080 1,180 1,300 1,410

II. Light Traffic 9,700 2,200 3,200 4,200 5,900 7,900 10,600 13,400

Heavy Traffic 2,100 470 580 680 760 840 920 1,000

III. Light Traffic 8,100 2,200 3,100 4,100 5,600 7,600 10,100 12,700

Heavy Traffic 1,500 500 580 680 760 830 920 990

Tuusala Road

I. Light Traffic 16,400 13,000 16,200 18,200 24,300 32,800 43,400 55,400

Heavy Traffic 3,690 3,500 4,120 4,440 4,860 5,360 5,920 6,400

II. Light Traffic 12,500 9,900 12,100 13,700 18,400 24,700 33,000 41,700

Heavy Traffic 2,150 2,080 2,440 2,740 3,030 3,350 3,690 4,000

III. Light Traffic 8,200 8,000 10,500 12,300 16,500 22,300 29,700 37,500

Heavy Traffic 1,400 1,400 1,660 1,860 2,060 2,270 2,510 2,710

Expressway

I. Light Traffic - 15,600 22,400 32,000 45,200 61,100 81,700 103,000

Heavy Traffic - 2,640 3,040 3,440 3,780 4,180 4,610 4,980

II. Light Traffic - 10,100 15,400 22,300 31,000 41,900 56,100 70,700

Heavy Traffic - 1,700 1,960 2,240 2,490 2,750 3,030 3,290

III. Light Traffic - 6,100 8,700 12,500 17,600 23,800 31,800 40,000

Heavy Traffic - 1,000 1,260 1,460 1,620 1,770 1,960 2,120

/1 Before opening of expressway.

/2 After opening of expressway.

Source: Mission Estimates.

October 1975

ANNEX VIII

FINLAND


Annual Traffic Growth Rates for Expressway, 1970-2003

Appraisal Estimates Revised EstimatesVehicles Vehicles

Light Heay Light Heavy

1970-75 10.0 6.0 (17.0)/1 (21.0) /1

1976-80 8.5 5.0 7.0 2.0

1981-85 7.0 4.5 7.5 3.0

1986-90 6.0 4.0 7.0 2.0

1991-2003 5.0 3.5 6.0 2.0

/1 Includes growth due to diverted traffic

Source: National Board of Public Roads and Waterways and Mission estimate.

October 1975

ANNEX IX

FINLAND


Vehicle Operating and Time Costs 1974

for Existing Roads and Expressway(Fmk/vehicle-km)

Appraisal Estimate Revised EstimateLight Heavy Light Heavy

Vehicles Vehicles Vehicles Vehicles

A. Existing Roads/

(without Expressway)

Operating Cost 0.090 0.297 0.191 0.497

Time Cost 0.089 0.217 o.148_ 13

Total 0.179 o.514 0 /339/2 0.930 /2

B. Expressway --

Operating Cost 0.087 0.301 0.131 0.452

Time Cost 0.051 0.150 0.102 0.300

Total 0.138 0.451 0.233 0.752

Vehicle operating and time costs on Main Road 4-5 and Expresswayassumed equal in 1974.

2 Aeighed average between Main Road h-5 and Tuusala Road


October 1975

FINLAND


Estimated Vehicle Operating Costs in the Tattariharju - Jarvenpaa Corridor1

Without Expressway With ExpresswayRoad Section 1974 1979 1984 1989 1994 1999 2003 1974 1979 1984 1989 1994 1999 2003

Main Road 4 - 5

I. Light Traffic 0.346 0.421 0.437 0.437 0.437 0.437 0.437 0.233 0.253 0.278 0.303 0.332 0.362 0.391Heavy Traffic 0.943 1.062 1.092 1.092 1.092 1.092 1.092 0.752 0.792 0.840 0.883 0.928 0.974 1.02]

II. Light Traffic 0.321 0.361 0.407 0.437 0.437 0.437 0.437 0.233 0.251 0.270 0.290 0.312 0.336 0.356Heavy Traffic 0.900 0.969 1.044 1.092 1.092 1.092 1.092 0.752 0.785 0.820 0.858 0.898 0.938 0.965

III. Light Traffic 0.300 0.332 0.368 0.407 0.437 0.437 0.437 0.233 0.248 0.263 0.280 0.300 0.320 0.334Heavy Traffic 0.864 0.921 0.982 1.047 1.092 1.092 1.092 0.752 0.777 0.804 0.833 0.863 0.893 0.930

Tuusala Road

I. Light Traffic 0.391 0.437 0.437 0.437 0.437 0.437 0.437 0.335 0.371 0.411 0.437 0.437 0.437 0.437Heavy Traffic 1.015 1.092 1.092 1.092 1.092 1.092 1.092 0.924 0.985 1.050 1.092 1.092 1.092 1.092

II. Light Traffic 0.350 0.395 0.437 0.437 0.437 0.437 0.437 0.321 0.349 0.379 0.413 0.437 0.437 0.437Heavy Traffic 0.952 1.019 1.092 1.092 1.092 1.092 1.092 0.900 0.950 1.003 1.058 1.092 1.092 1.092

III. Light Traffic 0.300 0.335 0.374 0.417 0.437 0.437 0.437 0.300 0.328 0.358 0.391 0.427 0.437 0.437Heavy Traffic 0.864 0.926 0.993 1.064 1.092 1.092 1.092 0.864 0.912 0.962 1.015 1.072 1.092 1.092

Expressway

I. Light Traffic 0 0 0 0 0 0 0 0.233 0.267 0.306 0.351 0.403 0.437 0.437Heavy Traffic 0 0 0 0 0 0 0 0.752 0.814 0.881 0.953 1.031 1.092 1.092

II. Light Traffic 0 0 0 0 0 0 0 0.233 0.258 0.288 0.320 0.356 0.397 0.437Heavy Traffic 0 0 0 0 0 0 0 0.752 0.802 0.856 0.913 0.973 1.038 1.092

III. Light Traffic 0 0 0 0 0 0 0 0.233 0.251 0.271 0.291 0.313 0.338 0.355Heavy Traffic 0 0 0 0 0 0 0 0.752 0.787 0.822 0.859 0.899 0.939 0.981

/1 Inclusive of passenger time value.

Source: Public Roads Administration and Mission Estimates.

October 1975 X

ANNEX XI

FINLAND


Rates of Return of Expressway

Economic ReturnOperating 20-Year 30-YearYear Period Period

Appraisal Estimate 10 -16Z 17

Revised Estimate A 10 17 18

Revised Estimate B 15 20 21

Note: Revised Estimate A excludes savings in cost of traffic divertedfrom the Tuusala road to the expressway, whereas RevisedEstimate B includes them.

/1 Estimated by Mission

October 1975

ANNEX XII

FINLAND


/1Rates of Return of Expressway Sections

SectionEconomic Return I II III All

Opening Year 19 30 1 15

20-Year Period 24 34 3 20

30-Year Period 24 35 5 21

/1 Most likely and/or actual values of investment, vehicle operatingcosts and traffic growth. Benefits include savings in cost oftraffic diverted from the Tuusala road to the expressway.

Source: Mission Estimates

October 1975

FINLAND


Road Paving Program

Width (meters) Traffic ADT /2 Pavement TypeContract Road Length Before After Quanti y Before After Paving Cost

District No. Section Location Item km_Ll Program Program 1OOOm 1970 1975 Progra-'- Program Fmk 1000 t4

Uusimaa I B Vt 1 btw. Sitarla- Pusula Road 17.05 8.5 8.5 145.1 3420 4450 Ab 18 (B) SAb 20/100 1175.3district border (3) Nummi Bus stops - - - 5.5 - - "

Junctions - - - 10.6 - - "

Kt 53 btw. Mlntynummi- Lohja Road 8.54 8.5 8.5 72.8 6250 8130 Ab 18 (B) SAb 20/100 488.4Lohjanharju (8) Vihti Bus stops - - - 2.5 - -

Junctions - - - 7.4 - -

/1 Including paved junctions. Vt = Main road, I class Ab = Asphalt Concrete/2 Vehicles per day. Kt = Main road, II class SAb = Bituminous gravel pavement/3 Pavement condition is indicated (G) good, (F) fair, (B) bad. Mt = Highway BSk = Base course bituminous gravel/4 Including tack coat and regulating mix. Pt = Local road X

Source: National Board of Public Roads and Waterways and Mission Estimates

October 1975

FINLAND

THIRD HIGHKAY PROJECT - LOAN 723-FI

Road Paving Program

Width (meters) Traffic Afl - Pavement TypeContract Road Lenth Before After Quantity Before After Paving C tDistrict NO. Section Location Item m Pro10ram Program 1 m2

1970 9 Progra:3 Program pmk 10

Uusimaa I C Vt 2 btw. Siippoo - Vihti Road 22.59 7.0 7.0 158.1 2760 3590 SAb(B) SAb 20/100 1047.85Tuorila (5) Karkkila Other - - - 11.2 - - n nAreas

Ab = Asphalt concrete/1 Including paved junctions. Vt - Main road, I class Sk = Bitu eous gravel pamravel7 Vehicles per day. Kt - Main road, II class = B ituminous gravelPavement condition is indicated (0) good, (F) fair, (B) bad. Mt = Highway

Including tack coat and regulating mix. Pt - Local road

Source: National Board of Public Roads and Vaterways and Mission EstimatesZRGr 1975

FINIAND


Road Paving Program

Contract Width (meters) /2 Pavement TypeDistrict Road Length Before After Quanti Traffic ADT & Before After Pavdh CostSection Location Item 19LL Program Progra 1000 m 1970 121 I S7 iESEEgr FmkXMAUTusimaa I D Mo Helsinki-Tuku btw. Espoo Roadways 12.81 2 x 11.0 2 x 11.0 282.4 13300 17200 Ab(B) S&> 2410 1790.7oumibbe-Veikkola (61) Kirkkonummi Ramps, 2.1 6.5 6.5 18.1 - -

etc.

Mo Helsinki-Turku btw. Espoo Roadways 6.85 2 x 10.8 2 x 10.8 147.8 10300 1300 SAb(B) Sb 2q= 1073.1Kauniainen Ramps, 1.93 6.5 6.5 14.9 - - -Intersection- etc.Oumbble (2)

Mt Klopinkylg- Espoo Roads 1.73 7.0 8.0 15.6 5960 8700 Ab(B) Sib 20/100 101.8Kauniainen (9) Kauniainen andJunctions

Including paved junctions. Vt - Main road, I class Ab = Asphalt concreteVehicles per day. Kt - Main road, II class Sib = Bituminous gravel pavementPavemebt conditica is indicated (G) good, (F) fair, (B) bad. Mt = Highway BSk - Base course bituminous gravelIncluding tack coat and regulating mix. Pt = Local road

Sources National Board of Public Roads and Waterways and Mission EstimatesOtor 1975

、処

MAA’園MlllAUSHALLltUKS【n KaPTOG瞬A「INEN TOIMISTO

MAP Dl

012o

0ARVENPÅA

0 18

100

o ° o320 £00

RUOTS NKYLA Jo

0

0 7100 ~ ~ 40~ ~ umfSM0NKYLA o

00 2400 o e.

TIKKUFULA0

(JA~ -0O

* °,O Z EL .6 0 0TT

AADT 19 75(Estimated from the firat bi-annual

vD (vehicles per day) count of 1975 general traffic ceneus)

< 500 mooforiajon /vrk

- 500-1500

-m 1 500 3000

3000 -6000

- 6000 -10000

10000 -20000

> 20000

AVERAGE DAILY TRAFFIC, 1975

for official use only -...

Documents