Project Number: 50064-001 Loan No: 3520/8328-GEO September 2019

Georgia: Batumi Bypass Road Project

Project Administration Manual

ABBREVIATIONS

ADB – Asian Development Bank DMF – design and monitoring framework EIA – environment impact assessment EMP – environmental management plan ETCIC – Eurasian Transport Corridor Investment Center of the

Ministry of Regional Development and Infrastructure of Georgia

GRM – grievance redress mechanism ICB – International competitive bidding ICS – individual consultant selection IEE – initial environmental examination LARP – land acquisition and resettlement plan LCS – least-cost selection MOF – Ministry of Finance of Georgia MRDI – Ministry of Regional Development and Infrastructure of

Georgia NCB – national competitive bidding OCR – ordinary capital resources PAM – project administration manual PBM – performance-based maintenance QCBS – quality- and cost-based selection RD – Roads Department of Georgia RRP – Report and Recommendation of the President to the Board SOE – statement of expenditure SPS – Safeguard Policy Statement SSEMP – site specific environmental management plan TOR – terms of reference

CONTENTS

I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 2

A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3

III. PROJECT MANAGEMENT ARRANGEMENTS 5

A. Project Implementation Organizations: Roles and Responsibilities 5 B. Key Persons Involved in Implementation 6 C. Project Organization Structure 7

IV. COSTS AND FINANCING 7

A. Cost Estimates Preparation and Revisions 9 B. Key Assumptions 9 C. Detailed Cost Estimates by Expenditure Category 10 D. Allocation and Withdrawal of Loan Proceeds 11 E. Detailed Cost Estimates by Financier 13 F. Detailed Cost Estimates by Outputs and/or Components 14 G. Detailed Cost Estimates by Year 15 H. Contract and Disbursement S-Curve 16 I. Fund Flow Diagram 18

V. FINANCIAL MANAGEMENT 19

A. Financial Management Assessment 19 B. Disbursement 20 C. Accounting 21 D. Auditing and Public Disclosure 21

VI. PROCUREMENT AND CONSULTING SERVICES 22

A. Advance Contracting and Retroactive Financing 22 B. Procurement of Goods, Works, and Consulting Services 23 C. Contract Variations 24

VII. SAFEGUARDS 24

A. Environment 24 B. Land Acquisition and Resettlement 25 C. Indigenous Peoples 26 D. Execution of Contracts for Works 26

VIII. GENDER AND SOCIAL DIMENSIONS 27

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 28

A. Project Design and Monitoring Framework 28 B. Monitoring 29 C. Evaluation 30 D. Reporting 30 E. Stakeholder Communication Strategy 30

X. ANTICORRUPTION POLICY 31

XI. ACCOUNTABILITY MECHANISM 31

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 31

APPENDIXES

1. PROCUREMENT PLAN 33

2. DRAFT TERMS OF REFERENCE OF CONSULTANTS 37 A. CONSTRUCTION SUPERVISION CONSULTANT FOR BATUMI BYPASS

ROAD PROJECT 37 B. PERFORMANCE-BASED MAINTENANCE CONTRACT DESIGN

CONSULTANTS 49 C. FINANCIAL AUDITOR 58 D. SUPERVISION OF THE CONSTRUCTION OF POTI BRIDGE AND ACCESS

ROADS 65

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and

management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the borrower, Asian Development Bank (ADB), and Asian Infrastructure Investment Bank (AIIB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The Ministry of Regional Development and Infrastructure of Georgia (MRDI) and the Roads Department of Georgia (RD) are wholly responsible for the implementation of ADB- and AIIB-financed projects, as agreed jointly between the borrower, ADB, and AIIB, and in accordance with the policies and procedures of the borrower, ADB, and AIIB. ADB and AIIB staff is responsible for supporting implementation including compliance by MRDI and the RD of their obligations and responsibilities for project implementation in accordance with ADB’s and AIIB’s policies and procedures.

3. At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail.

4. After ADB Board approval of the project's report and recommendations of the President (RRP),

changes in implementation arrangements are subject to agreement and approval pursuant to relevant borrower and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

1. The proposed project will (i) construct a new two-lane bypass road of 14.3 km skirting Batumi; and (ii) contract out routine and periodic maintenance work for about 200 km of international roads and secondary roads based on performance-based maintenance (PBM) contract. Batumi is a major port city in the southwest part of Georgia, bordered by the Black Sea to the west and Turkey to the south. The existing main road connecting Sarpi at the border with Turkey to Poti, a major port at the Black Sea, is a key transit route along the coastline of the Black Sea for heavy goods and passenger traffic from Turkey to Tbilisi and then onto Azerbaijan and the Caspian Sea.

2. Since 2004, supporting the borrower strategic thinking, development partners (World Bank, European Investment Bank, Japan International Cooperation Agency, and ADB) have jointly extended their assistance in borrower’s rehabilitating and upgrading the East-West Highway (EWH), the backbone of regional connectivity. Through their assistance and borrower’s focused effort, as of 2015, about 155 km of the EWH were already upgraded and about 113 km were under rehabilitation. Out of remaining 144 km, about 94 km have already secured development partners’ commitment for further financing. The borrower aims to complete the entire EWH rehabilitation and upgrading by 2020.

3. In 2009, ADB approved the multitranche financing facility (MFF) for Road Corridor Investment Program of $500 million mainly to assist the government in upgrading two key sections of E70 of the EWH. The tranche 1 project of 75,892,000 Special Drawing Rights (approximately $118.8 million) approved in 2009 was to construct a new 28 km two-lane bypass road skirting Kobuleti. The tranche 2 project of $ $150 million approved in 2010 was to construct a new 14 km two-lane bypass road skirting Batumi. In November 2011, the government requested an additional financing of $140 million through the tranche 3 project to make up for the shortage of financing for the tranche 1 project. However, the government decided to drop the Batumi bypass road because of a large increase in the cost, and subsequently canceled the tranche 2 project in November 2011.

4. In 2015, aspiring to upgrade the entire EWH to international standards, the borrower decided to reconsider the Batumi bypass road and requested ADB to revive the Batumi bypass road project because the congestion cost in Batumi city reached an intolerable level (aggravating traffic congestion caused by transit traffic’s running through heavily built up tourist and residential areas inside the city and mixing with dense urban traffic). The heavy transit traffic not only causes congestion problem but also poses serious social, environmental, and safety problems to local population and tourists in resort areas. Owing to (i) growing transit traffic from Turkey, (ii) excessively stretched urban congestion cost, (iii) serious social and safety costs to local population, and (iv) globally stabilized construction material price, the economic viability of the Batumi bypass road is well established.

5. Impact and outcome. The project is aligned with the following impact: improving regional connectivity in Georgia so that it can play the role of regional transport and logistic hub. The project will have the following outcome: efficiency of road transport along the EWH in Georgia improved.

6. Outputs. The outputs will be (i) a new bypass road skirting Batumi constructed; (ii) routine and periodic maintenance carried out using PBM contracts; (iii) detailed design, EIA, detailed LARP, and bidding documents for Batumi Bypass-Sarpi; and (iv) new Poti bridge and approach roads, and new Bakurtsikhe-Tsnori road constructed.

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7. The Batumi bypass road is located in Khelvachauri district and starts from Senaki-Poti-Sarpi road, passes through mountainous terrain and densely populated areas of villages of Makhinjauri, Gantiadi, Kapreshumi, Salibauri, Peria, Makhvilauri, and Kakhaberi, and ends at the juncture of the existing Batumi-Akhaltsikhe road (E691) on an entirely new alignment. It includes construction of 5 tunnels, 14 bridges on two major rivers and long valley crossings, and two grade separated interchanges. PBM contracts have both output- and performance-based components and consist of (i) initial repairs, so that routine maintenance can be performed (4-6 month duration); (ii) routine maintenance comprising lump-sum monthly payments per km related on meeting defined operating-and-maintenance service levels (entire contract period, typically 5 years); (iii) periodic maintenance (resurfacing), according to a given annual schedule or total output in km over the contract period; and (iv) emergency maintenance works. Preparation of detailed design and associated due diligence for Batumi Bypass-Sarpi will be carried out to ensure project readiness of the ensuing loan which is included in the country operations business plan for Georgia (2019-2021). Poti city is located on the Black Sea coast with a population of 50,000. Poti port is located in the city at the junction of the E-60 and E-70 (location of Batumi bypass road) transport corridors. It includes construction of a 2.5 km of a new two-lane road crossing the Rioni River including 500m bridge. Bakurtsikhe is connected to Tsnori through a category 3 road passing through seven settlements along the East-West corridor. The new 16 km bypass road will connect with a section of secondary bypass road under construction to the west, and with an existing road at km120 to the east, where the existing road becomes wider and straighter, continuing to the border with Azerbaijan at Lagodekhi.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities

Indicative Activities

2016 2017

Responsible Unit Q4 Q1 Q2 Q3 Q4

Advance contracting actions MRDI, RD, and ADB

Establish project implementation arrangements

MRDI, RD, and ADB

Approve and disclose safeguard documents

MRDI, RD, and ADB

Approve by ADB Board ADB

Sign Loan Agreement ADB and Borrower

Provide legal opinion Borrower

Declare loan effectiveness ADB

ADB = Asian Development Bank, MRDI = Ministry of Regional Development and Infrastructure of Georgia. Sources: Asian Development Bank estimates.

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B. Overall Project Implementation Plan

8. A Gantt chart recording outputs with key implementation activities initially on a monthly basis that is updated annually and submitted to ADB with contract and disbursement projections for the following year.

Table 2: Overall Project Implementation Plan

Activities 2016 2017 2018 2019 2020 2021 2022 2023 2024-

2026 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A. DMF

1. New bypass road skirting Batumi constructed

1.1 Complete payment for compensation and relocation of affected people with no dispute or complaint by June 2017

1.2 Complete bid evaluation for civil works contract by July 2017

1.3 Award civil works contract by August 2017

1.4 Recruit supervision consultants by September 2017

1.5 Complete payment for compensation and relocation of all affected people by August 2019

1.6 Complete civil works by December 2021

2. Routine and periodic maintenance carried out using PBM contracts

2.1 Recruit PBM design consultants by December 2019

2.2 Complete engineering design and procurement packaging by April 2020

2.3 Award PBM contracts by June 2020

2.4 Recruit supervision consultants by June 2020

2.5 Complete PBM contracts by June 2025

3. Detailed engineering design, EIA, detailed LARP and bidding documents for Batumi Bypass-Sarpi

3.1 Approve variation to consultant’s contract to change financing source for Batumi Bypass-Sarpi activity 2 by June 2019

3.2 Complete Batumi Bypass-Sarpi activity 2 by February 2020

4. New Poti bridge and approach

Defects Notification Period

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Activities 2016 2017 2018 2019 2020 2021 2022 2023 2024-

2026 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

roads, and new Barkurtsikhe-Tsnori road constructed

4.1 Complete payment for compensation and relocation of affected people with no dispute or complaint by March 2020

4.2 Complete bid evaluation for civil works contract for Poti bridge by February 2020 and for Barkurtsikhe-Tsnori road by March 2020

4.3 Recruit supervision consultants by April 2020

4.4 Award civil works contracts by April 2020

4.5 Complete payment for compensation and relocation of all affected people by May 2020

4.6 Complete civil works by June 2022

B. Management Activities

Procurement plan key activities to procure contract packages

Construction supervision consultant selection process

Environment management plan key activities

Gender action plan key activities

Communication strategy key activities

Annual and/or midterm review

Project completion report

DMF = design and monitoring framework, EIA = environmental impact assessment, LARP = land acquisition and resettlement plan, PBM = performance-based maintenance.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 3: Roles and Responsibilities Project Implementation Organizations

Management Roles and Responsibilities

Executing agency: Ministry of Regional Development and Infrastructure of Georgia

▪ Overall project oversight; ▪ Coordinate with all ministries and agencies involved in the project as

appropriate; ▪ Ensure timely provision of counterpart funds for project activities; and

▪ Ensure that the Roads Department (RD) of Georgia is adequately staffed and functional during the entire period of project implementation within the scope of its competency.

Implementing agency: Roads Department of Georgia

▪ Act as focal point for communication with ADB on project implementation related matters;

▪ Ensure compliance with all loan covenants and ADB’s guidelines, procedures, and policies;

▪ Recruit and supervise consultants and contractors, including approval of contract variations, suspension and termination of contracts;

▪ Procure civil works and consulting services with the assistance of detailed design consultant and external experts engaged as necessary;

▪ Evaluate bids and sign contracts; ▪ Verify and approve specifications and change orders, payments, etc.,

requested by the construction supervision consultant (the Engineer), submitting progress reports to ADB, taking over the site at completion of works, preparing the Borrower’s project completion report.

▪ Monitor and evaluate project activities and outputs, including periodic review and preparation of review reports identifying issues and action plans;

▪ Ensure compliance with the project’s LARP, EIA, and EMP; ▪ Prepare regular periodic progress reports, and the project completion

report, and ensure their timely submission to ADB; ▪ Administer and manage contracts; ▪ Assist ADB project review missions; ▪ Provide necessary office space, equipment, and facilities. ▪ Involve beneficiaries and civil society representatives in all stages of

project design and implementation as appropriate; ▪ Regularly post on RD’s website the updated project information

documents for public disclosure, including safeguards documents, in consultation with ADB; and

▪ Ensure project’s post-implementation sustainability and report to ADB on the impacts of the project.

Financial management agency: Eurasian Transport Corridor Investment Center of MRDI

▪ Handle financial management, disbursement, and project accounting with the assistance of RD;

▪ Establish adequate financial management system and submit timely withdrawal applications to ADB, in coordination with RD;

▪ Arrange timely financial audits as per agreed timeframe and take recommended actions, in coordination with RD; and

▪ Collect and retain all supporting and reporting documents, including annual audit reports and financial statements, in coordination with RD.

Ministry of Finance of Georgia

▪ Sign the project loan agreement; ▪ Provide documents and other requirements for loan effectiveness; ▪ Timely allocate and release counterpart funds; ▪ Monitor disbursement-related financial matters of the project

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Project Implementation Organizations

Management Roles and Responsibilities

implementation and provide appropriate coordination and support; ▪ Provide ADB with details of the authorized staff with specimen

signatures for withdrawal applications processing; ▪ Request extensions of the loan closing date if any; and ▪ Process and submit to ADB any request, when required, for

reallocating the loan proceeds.

Asian Development Bank ▪ Assist RD in recruiting the construction supervision consultant (CSC); ▪ Assist RD and the CSC in providing timely guidance at each stage of

implementation in accordance with agreed implementation arrangements;

▪ Review all documents that require ADB approval; ▪ Conduct an inception mission, periodic loan review missions, a mid-

term review, and a project completion mission; ▪ Monitor compliance with all loan covenants; ▪ Monitor compliance with the project’s safeguards requirements; ▪ Monitor compliance with financial audit recommendations; ▪ Timely process withdrawal applications and release eligible funds; ▪ Regularly update ADB’s project performance review reports with

assistance from RD; and ▪ Regularly post on ADB website the updated project information

documents for public disclosure, including safeguards documents as per disclosure provision of the ADB Safeguard Policy Statement (2009).

ADB = Asian Development Bank, CSC = construction supervision consultant; ETCIC = Eurasian Transport Corridor Investment Center of MRDI; MRDI = Ministry of Regional Development and Infrastructure of Georgia; RD = Roads Department of Georgia. Source: Asian Development Bank.

B. Key Persons Involved in Implementation

Executing Agency

Ministry of Regional Development and Infrastructure of Georgia (MRDI)

Mr. Irakli Karseladze First Deputy Minister, MRDI/ Chairman, RD Office Address: 12 Kazbegi Avenue, 0160 Tbilisi, Georgia

Implementing Agency: Roads Department (RD)

Mr. Levan Kupatashvili Deputy Chairman Telephone: +995 32 237 62 16 Email address: info@georoad.ge Office Address: 12 Kazbegi Avenue, 0160 Tbilisi, Georgia

Asian Development Bank

Transport and Communications Division (CWTC), Central and West Asia Department (CWRD)

Dong-Soo Pyo Director Telephone: +63 2 632 6765 Email address: dspyo@adb.org Office Address: 6 ADB Avenue, Mandaluyong City, Manila, Philippines

Shanny Campbell Principal Transport Specialist (Project Team Leader) Telephone: +63 2 632 5666 Email address: scampbell@adb.org Office Address: 6 ADB Avenue, Mandaluyong City, Manila, Philippines

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C. Project Organization Structure

9. The project organization structure is as shown in the diagram below.

IV. COSTS AND FINANCING

10. The project cost is estimated as $315.2 million (Table 4). With the revised scope, there will be no change in the project financing plan (Table 5). Tables 6, 8, 9, and 10, and 11 present the revised cost breakdown.

Table 4: Project Investment Plan ($ million)

Items

Amounta

Appraisalb Now After Scope

Change

A. Base Costc 1. Batumi Bypass Road 260.9 186.7 186.7 2. Performance-Based Maintenance 15.4 15.4 15.4 3. Detailed Design 0.0 1.6 1.6 a. Batumi Bypass–Sarpi Road 0.0 1.6 1.6 4. Additional Works 0.0 0.0 59.4 a. Poti Bridge and Approach Roads 0.0 0.0 24.4 b. Bakurtsikhe–Tsnori Road 0.0 0.0 35.0 Subtotal (A) 276.3 203.7 263.1

B. Contingenciesd 22.1 16.6 35.3 C. Financing Charges During Implementatione 16.8 12.5 16.8 Total (A+B+C) 315.2 232.8 315.2

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a Includes taxes and duties plus land acquisition costs to be financed from government resources. b Refers to the original amount as approved on 28 March 2017. c In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. d Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4%–1.5% on foreign

exchange costs and 3.0%–5.0% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

e Includes interest and commitment charges in the case of the Asian Development Bank loan; and interest, commitment charges, and front-end fee in the case of the Asian Infrastructure Investment Bank loan.

Source: Asian Development Bank estimates.

11. The borrower has requested (i) a loan of €108,190,000 (equivalent to $114.0 million) from ADB’s ordinary capital resources, and (ii) a loan of $114.0 million from the Asian Infrastructure Investment bank (AIIB) to help finance the project. The borrower will contribute approximately $87.2 million for land acquisition and resettlement and taxes and duties.

Table 5: Financing Plan

Source Amount

($ million) Share of Total

(%)

Asian Development Bank Ordinary capital resources (regular loan) 114.0 36.2 Asian Infrastructure Investment Bank (loan)a 114.0 36.2 Government 87.2 27.6 Total 315.2 100.0

a Joint and contractual cofinancing to be fully administered by Asian Development Bank. Source: Asian Development Bank estimates.

Table 6: Cost Estimate and Financing Plan

($ million)

Item Total Cost ADB AIIB Government

Amount Amount Amount

A. Investment Costsa 1. Land Acquisition and Resettlement 45.0 0.0 0.0 45.0 2. Civil Worksb 178.1 110.4 67.7 0.0 a. Batumi Bypass Road 112.7 45.0 67.7 0.0 b. Performance-Based Maintenance 10.0 10.0 0.0 0.0

c. Poti Bridge and Approach Roads 22.4 22.4 0.0 0.0

d. Bakurtsikhe-Tsnori Road 33.0 33.0 0.0 0.0 3. Consulting Servicesb 15.6 12.1 3.5 0.0

a. Performance-Based Maintenance Contract Design 1.0 1.0 0.0 0.0 b. Construction Supervision – Batumi Bypass Road 7.0 3.5 3.5 0.0 c. Supervision for Performance-Based Maintenance 2.0 2.0 0.0 0.0

d. Construction Supervision – Poti Bridge and Approach Roads 2.0 2.0 0.0 0.0

e. Construction Supervision – Bakurtsikhe-Tsnori Road 2.0 2.0 0.0 0.0

f. Detailed Design – Batumi Bypass-Sarpi Road 1.6 1.6 0.0 0.0 4. Project Management and Institutional Support 1.0 1.0 0.0 0.0 5 Taxes and Duties 36.6 0.0 0.0 36.6 Total Base Cost (A) 276.3 123.5 71.2 81.6

B. Contingenciesc 1. Physical 19.8 19.8 0.0 0.0 2. Price 2.3 2.3 0.0 0.0 Subtotal (B) 22.1 22.1 0.0 0.0

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Item Total Cost ADB AIIB Government

Amount Amount Amount

C. Financial Charges During Implementationd 1. Interest during implementation 15.3 6.3 9.0 0.0 2. Commitment charges 1.2 0.5 0.7 0.0 3. Front-end fee 0.3 0.0 0.3 0.0 Subtotal (C) 16.8 6.8 10.0 0.0

Total Project Cost (A+B+C) 315.2 152.4 81.2 81.6

Financing Portion 100% 48.3% 25.8% 25.9%

Notes: Numbers may not sum precisely because of rounding. a Includes taxes and duties of $36.6 million to be financed from borrower resources through tax exemption. b In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4%–1.5% on foreign

exchange costs and 3.0%–5.0% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 5-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Interest during construction for AIIB loan has been computed in accordance with AIIB’s Sovereign-Backed Loan Pricing, a commitment charge of 0.25% per year, and a one-time front-end fee of 0.25% charged on loan principal.

Source: Asian Development Bank estimates. 12. The ADB loan will have a 24-year term, including a grace period of 13 years, straight-line repayment method, an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.15% per year (the interest and other charges during construction to be capitalized in the loan), and such other terms and conditions set forth in the draft loan agreement. Based on this, the average loan maturity is 18.75 years, and the maturity premium payable to ADB is 0.20% per annum. It is expected that the AIIB loan will have a 25-year term, including a grace period of 14 years, an annual interest rate determined in accordance with AIIB’s sovereign-backed loan pricing, a commitment charge of 0.25% per year, a one-time front-end fee of 0.25% charged on the loan principal, and such terms and conditions set forth in the draft AIIB loan agreement. It is also expected that ADB will administer the AIIB loan earmarked for civil works and consulting services for construction supervision for the Batumi Bypass road. A. Cost Estimates Preparation and Revisions

13. The cost estimates were updated in September 2016 by the project design review consultant based on market prices for consulting services and civil works. B. Key Assumptions

14. The following assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: GEL2.3 = $1.00 (as of October 2016). (ii) Price contingencies based on expected cumulative inflation over the

implementation period are as follows:

Table 7: Escalation Rates for Price Contingency Calculation Item 2017 2018 2019 2020 2021 2022 2023 Average

Foreign rate of price inflation 1.4% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% Domestic rate of price inflation 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Sources: World Bank estimates (foreign rate); Asian Development Bank estimates (domestic rate).

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C. Detailed Cost Estimates by Expenditure Category

Table 8: Detailed Cost Estimates by Expenditure Category ($ million)

Item Foreign

Exchange Local

Currency Total % of Total Base Cost

A. Investment Costsa

1. Land Acquisition and Resettlement 0.0 45.0 45.0 16.2%

2. Civil Worksb 100.0 78.1 178.1 64.5%

a. Batumi Bypass Road 65.0 57.7 112.7 40.8%

b. Performance-Based Maintenance 3.0 7.0 10.0 3.6%

c. Poti Bridge and Approach Roads 14.4 8.0 22.4 8.1%

d. Bakurtsikhe-Tsnori Road 18.0 15.0 33.0 11.9%

3. Consulting Servicesb 8.0 7.6 15.6 5.6%

a. Performance-Based Maintenance Contract Design 0.6 0.4 1.0 0.4%

b. Construction Supervision – Batumi Bypass Road 2.8 4.2 7.0 2.5%

c. Supervision for Performance-Based Maintenance 0.6 1.4 2.0 0.7%

d. Construction Supervision – Poti Bridge and Approach Roads

0.8 1.2 2.0 0.7%

e. Construction Supervision – Bakurtsikhe-Tsnori Road 0.8 1.2 2.0 0.7%

f. Detailed Design – Batumi Bypass-Sarpi Road 0.8 0.8 1.6 0.6%

4. Project Management and Institutional Support 0.0 1.0 1.0 0.4%

5. Taxes and Duties 0.0 36.6 36.6 13.2%

Total Base Cost (A) 94.2 182.1 276.3 100.0

B. Contingenciesc

1. Physical 10.3 9.5 19.8 7.2%

2. Price 0.7 1.6 2.3 0.8%

Subtotal (B) 11.0 11.1 22.1 8.0%

C. Financial Charges During Implementationd

1. Interest during implementation 15.3 0.0 15.3 5.5%

2. Commitment charges 1.2 0.0 1.2 0.5%

3. Front-end fee 0.3 0.0 0.3 0.1%

Subtotal (C) 16.8 0.0 16.8 6.1%

Total Project Cost (A+B+C) 122.0 193.2 315.2 114.1%

Notes: Numbers may not sum precisely because of rounding. a In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. b Net of taxes and duties c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4-1.5% on foreign

exchange costs and at 3.0-5.0% on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 5-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount.

Source: Asian Development Bank estimates.

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D. Allocation and Withdrawal of Loan Proceeds

ADB OCR Loan

REVISED ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Batumi Bypass Project)

Number Item

Total Amount Allocated for ADB Financing

(€) Basis for Withdrawal

from the Loan Account

Category Subcategory

1 Works 90,366,000

1A Batumi Bypass Road 38,000,000 32.3% of total expenditure claimed

1B Performance-Based Maintenance 9,490,000 100% of total expenditure claimed*

1C Poti Bridge and Approach Roads and Bakurtsikhe-Tsnori Road

42,876,000 100% of total expenditure claimed*

2 Consulting Services 10,422,000

2A Construction Supervision for Batumi Bypass Road

3,322,000 50% of total expenditure claimed*

2B Performance-Based Maintenance Activities, Feasibility Study, and Detailed Design

3,500,000 100% of total expenditure claimed*

2C Construction Supervision for Poti Bridge and Approach Roads and Bakurtsikhe-Tsnori Road

3,600,000 100% of total expenditure claimed*

3 Project Management and Institutional Support

949,000 100% of total expenditure claimed*

4 Interest and Commitment Charges 6,453,000 100% of amounts due

TOTAL 108,190,000

* Exclusive of taxes and duties imposed within the territory of the Borrower. ** Revised allocation table approved by the Board through a major change in scope on 4 October 2019.

AIIB Cofinancing

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Batumi Bypass Project)

No. Item

Total Amount Allocated for AIIB Financing

($) Basis for Withdrawal from

the Loan Account

Category Subcategory

1 Civil Works 100,500,000

1.1 Batumi Bypass Road 100,500,000 48.0% of total expenditure claimed

2 Consulting Services 3,500,000

2.1 Construction Supervision for Batumi Bypass Road

3,500,000 50% of total expenditure claimed*

3 Interest and commitment charges including front-end fee

10,000,000 100% of total amount due

Total 114,000,000

*Exclusive of taxes and duties imposed within the territory of the Borrower.

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15. Except as ADB may otherwise agree, the items of the civil works and consulting services categories shall be financed out of the proceeds of the loan/grant on the basis of the percentages set forth in Table 6. Except as ADB may otherwise agree, the loan/grant proceeds for financing civil works, consulting services and other items shall be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017 as amended from time to time). 16. Notwithstanding the allocation of loan proceeds and the withdrawal percentages set forth in Table 7, (i) if the amount allocated to any category appears to be insufficient to finance all agreed expenditures in that category, ADB may, by notice to the Borrower, (a) reallocate to such category, to the extent required to meet the estimated shortfall, amounts which have been allocated to another category but, in the opinion of ADB, are not needed to meet other expenditures, and (b) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such category may continue until all expenditures thereunder shall have been made; and (ii) if the amount then allocated to any category appears to exceed all agreed expenditures in that category, ADB may, by notice to the Borrower, reallocate such excess amount to any other category.

13

E. Detailed Cost Estimates by Financier

Table 9: Detailed Cost Estimates by Financier ($million)

Item

ADB AIIB Borrower

Amount % of Cost Category

Amount % of Cost Category

Amount % of Cost Category

Total Cost

A. Investment Costsa 1. Land Acquisition and Resettlement 0.0 0.0% 0.0 0.0% 45.0 100.0% 45.0 2. Civil Works 110.4 51.6% 67.7 31.6% 33.8 16.8% 214.1 a. Batumi Bypass Road 45.0 31.5% 67.7 47.4% 27.8 21.0% 142.7 b. Performance-Based Maintenance 10.0 84.7% 0.0 0.0% 1.8 15.3% 11.8 c. Poti Bridge and Approach Roads 22.4 84.7% 0.0 0.0% 4.0 15.2% 26.4

d. Bakurtsikhe-Tsnori Road 33.0 84.7% 0.0 0.0% 5.9 15.2% 38.9 3. Consulting Services 12.1 65.7% 3.5 19.0% 2.8 15.2% 18.4 a. Performance-Based Maintenance Contract Design 1.0 84.7% 0.0 0.0% 0.2 16.7% 1.2

b. Construction Supervision – Batumi Bypass Road 3.5 42.4% 3.5 42.4% 1.2 14.6% 8.2

c. Supervision for Performance-Based Maintenance 2.0 84.7% 0.0 0.0% 0.4 16.7% 2.4

d. Construction Supervision – Poti Bridge and Approach Roads 2.0 84.7% 0.0 0.0% 0.4 16.7% 2.4 e. Construction Supervision – Bakurtsikhe-Tsnori Road 2.0 84.7% 0.0 0.0% 0.4 16.7% 2.4

f. Detailed Design – Batumi Bypass-Sarpi Road 1.6 84.7% 0.0 0.0% 0.3 15.8% 1.9 4. Project Management and Institutional Support 1.0 100.0% 0.0 0.0% 0.0 0.0% 1.0 Total Base Cost (A) 123.5 44.7% 71.2 25.8% 81.6 29.5 276.3

B. Contingenciesb

1. Physical 19.8 100.0% 0.0 0.0% 0.0 0.0% 19.8 2. Price 2.3 100.0% 0.0 0.0% 0.0 0.0% 2.3 Subtotal (B) 22.1 100.0% 0.0 0.0% 0.0 0.0% 22.1

C. Financial Charges During Implementationc

1. Interest during implementation 6.3 41.1% 9.0 58.9% 0.0 0.0% 15.3 2. Commitment charges 0.5 41.7% 0.7 58.3% 0.0 0.0% 1.2

3. Front-end fee 0.0 0.0% 0.3 100.0% 0.0 0.0% 0.3 Subtotal (C) 6.8 40.4% 10.0 59.6% 0.0 0.0% 16.8

Total Project Cost (A+B+C) 152.4 48.3% 81.2 25.8% 81.6 25.9% 315.2

Notes: Numbers may not sum precisely because of rounding. a In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. b Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4-1.5% on foreign exchange costs and at 3.0-5.0% on local

currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. c Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 5-year forward London interbank offered

rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Source: Asian Development Bank estimates.

14

F. Detailed Cost Estimates by Outputs and/or Components

Table 10: Detailed Cost Estimates by Outputs and/or Components ($ million)

Item Total Cost

Batumi Bypass Road Performance-Based

Maintenance Poti Bridge and

Approaches Bakurtsihke-Tsoni

Road Batumi-Sapi

Detailed Design

Amount

% of Cost Category Amount

% of Cost Category

Amount

% of Cost Category

Amount

% of Cost Category Amount

% of Cost-Category

A. Investment Costsa

1. Land Acquisition and Resettlement 45.0 42.3 94.0% 0.0 0.0% 0.7 1.6% 2.0 4.4% 0.0 0.0%

2. Civil Worksb 178.1 112.7 63.3% 10.0 5.6% 22.4 12.6% 33.0 18.5% 0.0 0.0%

3. Consulting Servicesb 15.6 7.0 44.9% 3.0 19.2% 2.0 12.8% 2.0 12.8% 1.6 10.3%

4. Project Management and Institutional Support

1.0 0.9 90.0% 0.1 10.0% 0.0 0.0% 0.0 0.0% 0.0 0.0%

5. Taxes and Duties 36.6 25.0 68.3% 2.0 5.5% 3.0 8.2% 6.3 17.2% 0.3 0.8%

Total Base Cost (A) 276.3 187.9 68.0% 15.1 5.5% 28.1 10.2% 43.3 15.7% 1.9 0.7%

B. Contingenciesc

1. Physical 19.8 16.0 80.8% 0.0 0.0% 1.5 7.6% 1.5 7.6% 0.0 0.0%

2. Price 2.3 2.1 91.3% 0.2 8.7% 0.4 17.4% 0.4 17.4% 0.0 0.0%

Subtotal (B) 22.1 18.1 81.9% 0.2 0.9% 1.9 8.6% 1.9 8.6% 0.0 0.0%

C. Financial Charges During Implementationd

1. Interest during implementation 15.3 13.0 85.0% 0.5 3.3% 0.3 2.0% 1.5 9.8% 0.0 0.0%

2. Commitment charges 1.2 1.1 91.7% 0.1 8.3% 0.0 0.0% 0.0 0.0% 0.0 0.0%

3. Front-end fee 0.3 0.3 100.0% 0.0 0.0% 0.0 0.0% 0.0 0.0% 0.0 0.0%

Subtotal (C) 16.8 14.4 85.7% 0.6 3.6% 0.0 1.8% 1.5 8.9% 0.0 0.0%

Total Project Cost (A+B+C) 315.2 220.4 69.9% 15.9 5.0% 0.3 9.6% 46.7 14.8% 1.9 0.6%

Notes: Numbers may not sum precisely because of rounding. a In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. b Net of taxes and duties c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4-1.5% on foreign exchange costs and at 3.0-5.0% on local

currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 5-year forward London interbank offered

rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Source: Asian Development Bank estimates.

15

G. Detailed Cost Estimates by Year

Table 11: Detailed Cost Estimates by Year ($ million)

Item Total Cost 2017 2018 2019 2020 2021 2022 2023 2024 2025

A. Investment Costsa 1. Land Acquisition and Resettlement 45.0 42.3 0.0 0.0 2.7 0.0 0.0 0.0 0.0 0.0 2. Civil Worksb 178.1 16.8 16.8 42.0 59.1 59.4 2.0 2.0 2.0 0.0 a. Batumi Bypass Road 112.7 16.8 16.8 20.0 29.1 30.0 0.0 0.0 0.0 0.0 b. Performance-Based Maintenance 10.0 0.0 0.0 0.0 2.0 2.0 2.0 2.0 2.0 0.0 c. Poti Bridge and Approach Roads 22.4 0.0 0.0 0.0 14.0 8.4 0.0 0.0 0.0 0.0 d. Bakurtsikhe-Tsnori Road 33.0 0.0 0.0 0.0 14.0 19.0 0.0 0.0 0.0 0.0

3. Consulting Servicesb 14.0 0.7 1.7 1.4 4.5 4.2 0.7 0.4 0.4 0.0 a. Performance-Based Maintenance Contract Design 1.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 b. Construction Supervision – Batumi Bypass Road 7.0 0.7 0.7 1.4 2.1 1.8 0.3 0.0 0.0 0.0 c. Supervision for Performance-Based Maintenance 2.0 0.0 0.0 0.0 0.4 0.4 0.4 0.4 0.4 0.0

d. Construction Supervision – Poti Bridge and Approach Roads

2.0 0.0 0.0 0.0 1.0 1.0 0.0 0.0 0.0 0.0

e. Construction Supervision – Bakurtsikhe-Tsnori Road

2.0 0.0 0.0 0.0 1.0 1.0 0.0 0.0 0.0 0.0

f. Detailed Design – Batumi Bypass-Sarpi Road 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 4. Project Management and Institutional Support 1.0 0.0 0.2 0.2 0.2 0.2 0.2 0.0 0.0 0.0 5. Taxes and Duties 36.6 4.3 3.0 11.0 8.0 9.0 0.4 0.2 0.2 0.0 Total Base Cost (A) 276.3 64.1 21.7 35.2 74.0 72.8 3.3 2.6 2.6 0.0

B. Contingenciesc

1. Physical 19.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 19.8 2. Price 2.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.3 Subtotal (B) 22.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 22.1

C. Financial Charges During Implementationd 1. Interest during implementation 15.3 0.2 0.8 1.7 3.1 4.5 5.0 0.0 0.0 0.0 2. Commitment charges 1.2 0.4 0.3 0.3 0.2 0.0 0.0 0.0 0.0 0.0 3. Front-end fee 0.3 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Subtotal (C) 16.8 0.9 1.1 2.0 3.3 4.5 5.0 0.0 0.0 0.0 Total Project Cost (A+B+C) 315.2 65.0 22.8 37.2 77.3 77.3 8.3 2.6 2.6 22.1 % of Total Project Cost 100.0 20.6 7.2 11.8 24.5 24.5 2.6 0.8 0.8 7.0

Notes: Numbers may not sum precisely because of rounding. a In September 2016 prices for the original scope, and in mid-2018 prices for the major change in scope portion. b Net of taxes and duties c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.4-1.5% on foreign exchange costs and at 3.0-5.0% on local

currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 5-year forward London interbank offered

rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Source: Asian Development Bank estimates.

16

H. Contract and Disbursement S-Curve0F0F

1

ADB and AIIB Contract Awards Disbursements

Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total

2017 0.0 0.0 0.0 105.1 105.1 2017 0.0 0.0 0.0 15.1 15.1

2018 0.0 0.0 0.0 0.1 0.1 2018 0.4 0.2 3.6 4.2 8.4

2019 0.0 0.1 1.6 0.2 1.9 2019 0.7 7.8 7.3 8.2 23.9

2020 0.0 54.1 0.0 0.0 54.1 2020 1.2 14.8 6.9 15.2 38.1

2021 0.0 0.0 0.0 0.0 0.0 2021 0.9 14.7 12.5 15.2 43.3

2022 0.0 0.0 0.0 0.0 0.0 2022 0.4 5.6 5.6 6.1 17.7

2023 0.0 41.9 0.0 0.0 41.9 2023 0.4 57.6 0.6 1.1 59.7

2024 0.0 0.0 0.0 0.0 0.0 2024 0.1 0.6 0.6 2.6 3.8

2025 0.0 0.0 0.0 17.6 17.6 2025 0.1 0.6 0.6 3.7 4.9

2026 0.0 0.0 0.0 0.0 0.0 2026 1.1 21.9 0.0 0.0 23.0 Total 220.7 Total 238.1

Source: Asian Development Bank estimates.

1 The civil works contract for Batumi Bypass road and PBM contracts are expected to be completed by Q4 2021 and Q2 2025, respectively. The contract and

award disbursements s-curve are updated due to a major change in scope (for Board approval on 4 October 2019) and based on an extended loan closing date for L3520 (i.e. 31 December 2025). Extension of L3520 closing date by 2 years to allow completion of all activities envisaged under the project will be processed separately after the major change in scope approval.

020406080

100120140160180200220240

20

17

Q1

Q2

Q3

Q4

20

18

Q1

Q2

Q3

Q4

20

19

Q1

Q2

Q3

Q4

20

20

Q1

Q2

Q3

Q4

20

21

Q1

Q2

Q3

Q4

20

22

Q1

Q2

Q3

Q4

20

23

Q1

Q2

Q3

Q4

20

24

Q1

Q2

Q3

Q4

20

25

Q1

Q2

Q3

Q4

20

26

Q1

Q2

Q3

Q4

$ M

illio

n

Contract Awards Cumulative Disbursements

17

ADB

Contract Awards Disbursements

Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total

2017 0.0 0.0 0.0 43.0 43.0 2017 0.0 0.0 0.0 6.1 6.1

2018 0.0 0.0 0.0 0.1 0.1 2018 0.4 0.1 1.4 1.7 3.6

2019 0.0 0.1 1.6 0.2 1.9 2019 0.4 3.4 3.2 4.0 10.9

2020 0.0 54.1 0.0 0.0 54.1 2020 1.0 9.4 2.8 9.8 22.9

2021 0.0 0.0 0.0 0.0 0.0 2021 0.7 9.3 8.4 9.8 28.2

2022 0.0 0.0 0.0 0.0 0.0 2022 0.4 5.6 5.6 6.1 17.7

2023 0.0 0.0 0.0 0.0 0.0 2023 0.4 0.6 0.6 1.1 2.6

2024 0.0 0.0 0.0 0.0 0.0 2024 0.1 0.6 0.6 2.6 3.8

2025 0.0 0.0 0.0 17.6 17.6 2025 0.1 0.6 0.6 3.7 4.9

2026 0.0 0.0 0.0 0.0 0.0 2026 1.1 21.9 0.0 0.0 23.0 Total 116.7 Total 124.1

a Contract awards and disbursements up to Q2 2019 are actualized. b Amounts to be awarded and disbursed are based on net amount (USD equivalent) as of 11 September 2019. Source: Asian Development Bank estimates. AIIB

Contract Awards Disbursements

Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total

2017 0.0 0.0 0.0 62.1 62.1 2017 0.0 0.0 0.0 8.9 8.9

2018 0.0 0.0 0.0 0.0 0.0 2018 0.0 0.2 2.1 2.5 4.8

2019 0.0 0.0 0.0 0.0 0.0 2019 0.3 4.4 4.2 4.1 12.9

2020 0.0 0.0 0.0 0.0 0.0 2020 0.2 5.4 4.1 5.4 15.1

2021 0.0 0.0 0.0 0.0 0.0 2021 0.2 5.4 4.1 5.4 15.1

2022 0.0 0.0 0.0 0.0 0.0 2022 0.0 0.0 0.0 0.0 0.0

2023 0.0 41.9 0.0 0.0 41.9 2023 0.0 57.0 0.0 0.0 57.0 Total 104.0 Total 114.0

a Contract awards and disbursements up to Q2 2019 are actualized. b Amounts to be awarded and disbursed are based on net amount (USD equivalent) as of 11 September 2019. Source: Asian Development Bank estimates.

18

I. Fund Flow Diagram

MOF

ADB/ AIIB

MRDI

ETCIC

Individual Consultants and service providers

Consultants/ Contractors

Budget Allocation GoG share

ADB : Asian Development Bank AIIB : Asian Infrastructure Investment Bank IPC : interim payment certificate MOF : Ministry of Finance MRDI : Ministry of Regional Development and Infrastructure of Georgia RD : Roads Department of Georgia ETCIC : Eurasian Transport Corridor Investment Center of MRDI

Direct Payments to Contractors and Consulting Firms

lending

Withdrawal Applications

loan repayment

Treasury Checks

IPC & Invoices

Advance Account (1)

replenishment

account administration

RD

IPC & Invoices

Budget Allocation ADB share

Small Payments Via Treasury

Invoices

19

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

17. The financial management assessment (FMA) was conducted in October 2016 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. Ministry of Regional Development and Infrastructure (MRDI) of Georgia is the executing agency and the Roads Department of Georgia (RD) under the MRDI, supported by the Eurasian Transport Corridor Investment Center of MRDI (ETCIC) for the financial management, is the implementing agency of the project. The FMA considered the capacity of the ETCIC, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 18. Originally established as a temporary organization to undertake the financial management of the World Bank’s road project according to presidential decree in 1995, ETCIC is conducting the financial management for the externally funded projects. Including a director, ETCIC comprises 6 professional staff members trained in financial management and accounting, and 5 projects’ supporting specialists. Although physically located in the MRDI/RD, ETCIC’s eleven staff members are not departmental employees, and ETCIC’s operating expenses are compensated by the funds from the externally-funded projects, e.g., from World Bank (WB), Asian Development Bank (ADB), and European Investment Bank (EIB). ETCIC has covered eight closed / six ongoing projects from WB, two ongoing projects from ADB, and two ongoing projects from EIB. It will also perform the financial management for ADB’s Secondary Road Improvement Project as well as this project.

19. Based on the assessment, the key financial management risks identified are (i) ineffective and outdated financial management manual; and (ii) actual cost variance from the budget not reported1F1F

2. It was concluded that the overall pre-mitigation financial management risk of ETCIC is moderate, and can be lowered by mitigating measures. The ETCIC has agreed to implement an action plan as key measures to address the deficiencies. The financial management action plan is provided in Table 1 below.

Financial Management Action Plan Key Risk Action Plan Responsibility Timing

Ineffective and outdated financial management manual

The ETCIC’s financial management manual will be updated to reflect the project specific fund flows, disbursement arrangements, and other relevant sections for the upcoming ADB projects.

ADB, ETCIC Before project implementation

Actual cost variances from the planned amount are not properly reported

EICIC will provide the interim unaudited project financial statements including planning, actual, and variance amounts (current and cumulative amounts) upon request by ADB.

ETCIC During project implementation

ADB = Asian Development Bank, ETCIC = Eurasian Transport Corridor Investment Center of MRDI, MRDI = Ministry of Regional Development and Infrastructure of Georgia, RD = Roads Department of Georgia.

2 The previous ADB projects’ annual project financial statements have not shown the actual cost variance from the

budget due to the variance clearance process through the RD/MRDI and Ministry of Finance of Georgia, and the variance has not been reported because ADB did not separately request for it.

20

B. Disbursement

1. Disbursement Arrangements for ADB and AIIB

20. The loan proceeds of ADB and AIIB loans will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time), 2F2F

3 and detailed arrangements agreed upon between the borrower, ADB, and AIIB. The Borrower shall submit to ADB the original withdrawal applications covering the finances of ADB. ADB will review submitted withdrawal applications and pay its share of financing. With respect to the AIIB Financing, the Borrower shall submit one original of the withdrawal application and copies of supporting documents to ADB, and one identical copy of such withdrawal application and copies of supporting documents to AIIB. ADB shall review each withdrawal application and advise AIIB to make the necessary payment, if any, subject to approval by AIIB. AIIB’s approval shall be made in accordance with the AIIB Loan Agreement and other applicable guidelines and procedures. AIIB will promptly inform ADB once payment has been made. In case AIIB rejects the payment requested in the withdrawal application, it shall promptly inform ADB and the Borrower in writing of its decision and the basis for such decision. ADB shall not be held liable for any decision made by AIIB with respect to payments requested in withdrawal applications or any delay in disbursement outside of ADB's control. 21. Advance fund procedure. An advance account will be opened in the Treasury Service of the Ministry of Finance (MOF) as a sub-account of the Treasury FX Account held with the National Bank of Georgia. The currency of the advance account is EURO. This will be administered by ETCIC. The request for advance to the advance account should be accompanied by an estimate of expenditure sheet 3F3F

4 setting out the estimated expenditures for the first six (6) months of project implementation. For every liquidation and replenishment request of the advance accounts, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the advance account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the abovementioned bank statement against ETCIC’s records.4F4F

5 22. The outstanding advance of the advance account will not at any time exceed the estimated ADB financed expenditures to be paid from the advance account for the next 6 months. 23. Statement of expenditure procedure. The SOE procedure may be used for reimbursement of eligible expenditures or liquidation of advances to the advance account(s). Supporting documents and records for the expenditures claimed under the SOE should be maintained and made readily available for review by ADB's disbursement and review missions, upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. 24. For direct payments, the contractors and consultants will submit their invoices or interim payment certificates as appropriate to the ETCIC who will process them and send with the required withdrawal applications to ADB and AIIB, as applicable.

3 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 4 Available in Appendix 29 of the Loan Disbursement Handbook. 5 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.

21

25. Before submitting the first withdrawal application, the Borrower must submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is set in accordance with the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below this amount should be paid (i) by the RD/ETCIC and subsequently claimed from ADB through reimbursement; or (ii) from the advance account, unless otherwise accepted by ADB.

2. Disbursement Arrangements for Counterpart Fund

26. All disbursements under the borrower portion of financing will be carried out in accordance with regulations of the Government of Georgia (GOG). Annual GOG funds allocation for the project will be confirmed by State Budget Law for each fiscal year. Single GEL Account of Treasury Service of Georgia opened at the National Bank of Georgia will be used as project account and GOG financing funds will be allocated in accordance with quarterly breakdown prepared by RD and ETCIC, approved by MRDI and accepted by MOF. All changes in GOG share budget figures such as requests for reallocation between quarters, request for additional funds and etc. will be jointly prepared by RD and ETCIC. Through MRDI request for changes will be submitted to MOF, after MOF approval the Treasury Service of Georgia will adjust data in on-line eTreasury System. The MOF, MRDI, RD, and ETCIC will be responsible to provide counterpart fund in a timely manner. C. Accounting

27. ETCIC will maintain separate project accounts and records by funding source for all expenditures incurred from the project following International Public Sector Accounting Standard for cash-based accounting with USD as reporting currency. ETCIC will prepare the project financial statements in accordance with the borrower’s accounting laws and regulations which are consistent with international accounting principles and practices. During the project implementation, upon ADB’s request, ETCIC will also provide the interim project financial statements (unaudited) including the budget and actual cost comparison. D. Auditing and Public Disclosure

28. RD will ensure that the ETCIC cause the detailed project financial statements to be audited in accordance with International Standards on Auditing and with the borrower's audit regulations, by an independent auditor acceptable to ADB. The audited project financial statements will be submitted in the English language to ADB within 6 months of the end of the fiscal year by RD. 29. The annual audit report for the project accounts will include an audit management letter and audit opinions which cover (i) whether the project financial statements present a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework; (ii) whether loan and grant proceeds were used only for the purposes of the project or not; (iii) the level of compliance for each financial covenant contained in the legal agreements for the project.

30. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor.

22

31. The borrower including MRDI, RD, and ETCIC has been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements. 5F5F

6 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that ADB’s financing share is used in accordance with ADB’s policies and procedures.

32. Public disclosure of the project financial statements, including the audit report on the project financial statements, will be guided by ADB’s Public Communications Policy (2011). 6F6F

7 After review, ADB will disclose the project financial statements for the project and the opinion of the auditors on the financial statements within 14 calendar days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The Audit Management Letter will not be disclosed.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

33. All advance contracting and retroactive financing will be undertaken in conformity with ADB Procurement Guidelines (2015, as amended from time to time) and ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time). The issuance of invitations for bid (IFB) and consulting services recruitment notices (CSRN) under advance contracting and retroactive financing will be subject to ADB approval. The borrower, EA and IA have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 34. Advance contracting. Advance contracting has been undertaken for civil works and consulting services packages to facilitate project implementation. Procurement preparatory works are completed for construction of a new two-lane bypass road skirting Batumi and for selection of construction supervision consultant and PBM design consultant. The bidding documents and consultants’ TORs of these packages prepared by RD are reviewed by ADB and IFB and CSRN are ready for web posting. Under advance contracting, RD can complete the consultant selection process entirely and the bidding process up to the contract award. 35. Retroactive financing. Retroactive financing is specifically agreed by ADB and the borrower in the loan agreement and only pursuant to the terms of the relevant agreement. The borrower’s capacity to carry out related contracting and/or disbursement is adequate. The

6 ADB approach and procedures regarding delayed submission of audited project financial statements:

• When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (i) the audit documents are overdue; and (ii) if they are not received within the next six months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

• When audited project financial statements have not been received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (i) inform the executing agency of ADB’s actions; and (ii) advise that the loan may be suspended if the audit documents are not received within the next six months.

• When audited project financial statements have not been received within 12 months after the due date, ADB may suspend the loan.

7 Available from http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications

23

maximum amount of eligible expenditures for retroactive financing of civil works and consulting services will be up to 20% of the total ADB loan and AIIB loan, respectively, incurred before loan effectiveness, but not more than 12 months before the signing of the loan agreements. The submission of the audited project financial statements and the audit report will be from the date when expenditures that were approved for retroactive financing were incurred.

B. Procurement of Goods, Works, and Consulting Services

36. Procurement of civil works and related services financed under the project, including the ADB-administered loan, will be done in accordance with ADB’s Guidelines for Procurement (2015, as amended from time to time). Consulting services will be required for reviewing designs and supervising construction and designing PBM contracts. Consultants will be recruited in accordance with ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time).7F7F

8 Exceptionally, as the AIIB will co-finance the project with ADB administration, the universal procurement will be applied both for civil works and consulting services.8F8F

9 37. Design review and construction supervision consultants will review the contract designs, in particular bridges and tunnels and recommend improvement or changes, if necessary. Within three months of the commencement of the project’s civil works, they will review the designs for three of the intersections on the project road (Intersections 2, 3, and 4), and, based on traffic and other studies, (i) prepare simplified designs for some or all of these intersections, based on relevant international practice; (ii) discuss the designs with the Employer and ADB and thereafter prepare final designs; and (iii) introduce these designs into the civil works contract as replacements for the designs presently incorporated in the civil works contract documents, through an appropriate contract variation. In undertaking this task, the consultant will ensure to the extent possible that all of the work elements included in the new intersection designs are present in the civil works contract as signed. 38. A procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages is in Appendix 1. 39. International competitive bidding procedures will be used for civil works contracts estimated to cost $5 million or more. There are four civil works packages under the project (i) construction of Batumi Bypass Road, (ii) construction of new Poti Bridge and approach roads, (iii) construction of new Bakurtsikhe-Tsnori road, and (iv) an indicative package for PBM contracts, which may be subject to change based on PBM design. There will be no procurement of goods. 40. An estimated 219 person-months of consulting services (186 international, and 33 national) are required for construction supervision of Batumi Bypass road. Construction supervisions consultants will also be engaged for the two additional construction subprojects, Poti Bridge and approach roads and Bakurtsikhe-Tsnori road and for PBM contracts. The supervision consultants will also help RD in review of detailed design (if applicable) and carry out contract administration. These consulting firms will be engaged using the quality- and cost-based selection method with a standard quality–cost ratio of 90:10. Individual consultants with an estimated 6 person-months inputs (5 international, 1 national) are required to design PBM

8 Checklists for actions required to recruit consultants under different method available in e-Handbook on Project

Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 9 ADB. 2015. Enhancing Operational Efficiency of the Asian Development Bank. Manila.

24

works and preparation of procurement packaging and bidding requirements. A lump sum contract will be used for external financial auditor (estimated 20 person-months; national) under LCS method for recruitment. The terms of reference for selected consulting services are detailed in Appendix 2. 41. Individual consultants to augment the procurement unit of RD (national procurement specialist) will be engaged using the individual consultant selection method. An output-based contract will be used for project audit services under LCS method for recruitment.

C. Contract Variations

42. Before agreeing to any modification or waiver of the terms and conditions of a Goods, Services9F9F

10 and/or Works contract, including change orders, time extensions, payment schedules, the RD will seek ADB’s no objection through a formal letter signed by a key person of the borrower or an authorized representative. This applies in particular to (a) any extension of the stipulated time for completion of a contract for Works; (b) any modification or waiver of the conditions of a contract for Works, including any change order that falls under (c) or (d) below; (c) any change order under a contract for Works that will in aggregate increase the original contract price; or (d) any change order under a contract for Works that will affect more than 15% of the original contract price (either through increases or decreases), even if the net effect of such change order will not in aggregate increase the original contract price. Such aggregate shall take into account any previous or simultaneous change order or orders under such contract.

VII. SAFEGUARDS

A. Environment

43. The project is categorized as A for environment, as it is a new alignment that will pass through hilly terrain, involving extensive civil works including tunnels and bridge resulting in a large scale operation. In 2009, at the PPTA stage as required by ADB environment policy 2002, an environmental impact assessment (EIA) report was prepared and approved for the entire Adjara by-pass. Subsequently, in 2011, as part of detailed design, the EIA report was updated. In 2016, the EIA has again been revised to incorporate environmental impacts, new legislation, environmental management costs, new public consultations, climate change risks, and an assessment of the cumulative impacts. The updated EIA will be disclosed on the ADB website by 30th October 2016. 44. The environmental impacts anticipated are largely concentrated in the construction phase and will result from the large scale of the project, and as the road passes through hilly terrain and the vicinity of settlements and water courses, soil erosion, noise, dust, vibration, air quality impacts are likely to be significant. Air quality, noise and vibration impacts are also expected during eth operation phase. The environmental management plan (EMP) will include measures to minimize anticipated impacts during both construction and operation. Prior to construction, the EMP will be updated into a site specific EMP (SSEMP) by the contractors. The SSEMP will be prepared employing a risk assessment approach to select the impact and site appropriate mitigation measures.

45. The RD has divisions for resettlement and environmental protection, managed by division heads. Both divisions are well staffed with several specialists and project managers for

10 http://www.adb.org/Documents/Manuals/PAI/PAI-2.06-18Oct2010.pdf

25

ongoing donor-funded projects. The environment protection division has one specialist dedicated to ADB projects. The RD will be assisted by the construction supervision consultant’s environmental specialists during project implementation. The EMP, which also defines the institutional arrangements and responsibilities for its implementation, will be included in the bidding documents, and in the ensuing contracts. The SSEMP will be implemented under close monitoring provided by the construction supervision consultant and the environment and resettlement division of the RD. The RD will submit semiannual environmental monitoring reports to ADB for disclosure on the ADB website. The capacity building of the RD environment specialist, the contractors and supervision consultants will also be conducted through CWRD’s ongoing regional TA.

46. For the new scope, Bakurtsikhe-Tsnori is classified B for environment as the potential environmental impacts are largely related to the construction stage and are temporary and site specific. Poti bridge is classified A for environment owing to the potential for significant irreversible adverse impacts on the Rioni River—one of the few remaining spawning rivers globally for several critically endangered fish species. B. Land Acquisition and Resettlement

47. The project is category A for involuntary resettlement safeguards. 13.7km of the 14.3 km long road will require land acquisition and resettlement (LAR). For the purposes of LAR the road has been split into two sections - Section 1 (7km) and Section 2 (6.7km). Implementation-ready land acquisition and resettlement plans (LARPs) have been produced for each section, Section 1 LARP and Section 2 LARP. Both LARPs have been approved by ADB and disclosed, and are under implementation. During project preparation stage, community consultations were conducted, all the requirements of the ADB’s Safeguard Policy Statement (2009) were followed, and all requirements shall continue to be met during LARP implementation. A grievance redress mechanism GRM has been agreed and established and is operational. Consultation and disclosure activities will continue to be undertaken with the affected households and other concerned groups throughout LARP implementation period 48. Civil works can commence only when the updated LARP is fully implemented portion-wise and ADB has accepted the compliance report prepared by an external monitoring agency (EMA) and submitted by RD. This requirement will be stipulated in the civil works contract documents. The compliance report submitted by RD will be the basis of ADB issuing no objection for starting civil works. In respect of each discrete portion of the Batumi bypass road, all land acquisition and resettlement activities, including all payments of required compensation and entitlements, and satisfaction of all requirements and actions set out in the relevant RP, should be completed and certified as such by the EMA before any construction commences on such portion and before any notice to proceed is issued for such portion under the relevant civil works contract. For the avoidance of doubt, the term “portion” as used in this paragraph means any portion of the Batumi bypass road, including any portion of the 7 kilometer section of such road or the 6.7 kilometer section of such road, each of which section is covered by an RP, and construction may commence on such portion and a notice to proceed may be issued for such portion provided that all land acquisition and resettlement activities for such portion have been completed and certified as described in this paragraph. 49. RD must ensure that the approved LARPs and any future updates are in accordance with the applicable Georgian laws and regulations, and ADB’s SPS (2009), and:

(i) the final LARPs and any future updates are disclosed to displaced persons in the

26

local language and at readily accessible locations; (ii) the final implementation-ready LARP for Section 2 is submitted to ADB for review

and clearance prior to LARP implementation; (iii) all land and rights of way required for the project are acquired and made

available in a timely manner; (iv) a compliance report produced by an external monitor, certifying that all

compensation and resettlement assistance has been provided to all displaced persons, in full accordance with the requirements of SPS (2009), is accepted by ADB prior to handover of land to contractor(s) for commencement of civil works;

(v) efficient grievance redress mechanism is maintained in place and operational to assist displaced persons resolve queries and complaints in a timely manner;

(vi) adequate staff and resources are made available for supervising and monitoring the implementation of the LARP, and reports are submitted to ADB biannually and at the completion of the LARP implementation process; and

50. If during implementation of the LARP, any additional resettlement impacts are identified, the LARP is updated and prior approval by ADB and the relevant government agencies is obtained before further implementation of the LARP. 51. For the new scope, Bakurtsikhe-Tsnori is classified A for resettlement. Overall 899 privately owned land parcels are affected. For the first 13 km of the 16 km alignment, affected persons each lose a strip of agricultural land adjacent to the existing irrigation access road and its buffer zone, however most plot sizes are small. For the last (easternmost) 3km, the road deviates from this alignment to avoid houses, and therefore requires acquisition of its entire 13m width. As such 615 of the 720 affected households along the alignment will lose more than 10% of their total productive land, classifying them as severely affected. Poti bridge is classified B for involuntary resettlement, with only a few business and agricultural plots located along the approach roads affected and the impacts insignificant. C. Indigenous Peoples

52. There are no indigenous peoples, as defined in Safeguard Policy Statement (SPS) 2009, in the project area, and the project is classified as category C for indigenous people. 53. For the new scope, both subprojects are classified category C for indigenous peoples as the proposed areas do not have any social or cultural groups classified as indigenous peoples under ADB’s Safeguard Policy Statement (2009).

D. Execution of Contracts for Works

54. RD will ensure that, subsequent to award of a works contract, no notice to proceed is issued to the contractor until the applicable provisions of the LARP (including timely payment of compensations to affected persons), the updated EIA report and EMP have been complied with. RD will ensure that any unanticipated impact during civil works will be addressed by the contractor in accordance with ADB’s SPS (2009).

55. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement (2009). The borrower shall through MRDI and RD ensure that no proceeds of the loan are used to finance

27

any activity that is included in the list of prohibited investment activities provided in the said appendix of ADB’s SPS.

VIII. GENDER AND SOCIAL DIMENSIONS

56. The direct beneficiaries of the Project will be road users of the country, comprising sometimes overlapping subgroups including drivers, passengers, traders, operators of transport and other road-using enterprises, tourists, and other travelers. Given expected substantial traffic increases from diverted traffic, a significant proportion of these beneficiaries will originate from other regions. The project will benefit a project area population of approximately 150,000 persons Reductions in transport cost and time are the principal direct impact channels of the project. Other primary channels include impacts of improved road safety and greater comfort in travel, and employment provided by project construction. Less directly, road improvements are a channel for impacts enhancing access to services and employment by all groups, including the poor and vulnerable. Impacts of improved access to markets for farmers could transmit broad impacts across the project area. Construction and traffic-serving enterprises and employment will convey significant benefits to the project area. The living situation of the poor will be improved by having more access to better and more affordable services; having better opportunities to raise their income and improve their sustainable employment; and being better protected against social, life, economic, environmental and climate related risks.

28

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

REVISED DESIGN AND MONITORING FRAMEWORK10F

11

Impact the Project is Aligned with Improving regional connectivity in Georgia so that it can play the role of regional transport and logistics hub (The Socioeconomic Development Strategy of Georgia [Georgia 2020]).

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Risks

Outcome a. Travel time from Sarpi to

Poti reduced to 1.5 hours by 2023 (2016 baseline: 3.0 hours)

b. Travel time from Tbilisi to the

border point at Lagodekhi (141km) reduced to 1.7 hours by 2023 (baseline: 2.1 hours in 2019)

Efficiency of road transport along the EWH in Georgia improved

a–b. Roads Department surveys

An inadequate road maintenance budget may jeopardize the sustainability of large investments in the road network and the preservation of road assets.

Outputs 0B0 B1. New bypass road

skirting Batumi constructed

2. Routine and

periodic maintenance carried out using PBM contracts

3. Detailed design,

EIA, detailed LARP and bidding documents for Batumi Bypass–Sarpi road endorsed

4. New Poti Bridge

and approach roads, and new Bakurtsikhe–Tsnori road constructed

1a. New 14.3 km, two-lane bypass road skirting Batumi constructed by 2021, with an international roughness index of 3.0 m/km or less (2016 baseline: 0 km)

2a. By 2023, about 200 km of

international roads and connecting secondary roads maintained by private contractors on long-term PBM contracts of no less than 5 years, with an international roughness index of 3.0 m/km or less (2016 baseline: 0 km)

3a. Detailed design; and draft

EIA, LARP, and bidding documents endorsed by ADB by February 2020.

4a. New 2.5 km, two-lane road

crossing the Rioni River, including a 500m bridge, constructed by 2022, with an international roughness index of 3.0 m/km or less (2019 baseline: 0 km)

1a. Supervision consultant’s project progress report 2a. Supervision consultant’s project progress report 3a. ADB reviews and Roads Department progress reports 4a–b. Supervision consultant’s project progress report

A small number of affected people may decline relocation and resort to lengthy disputes outside of the grievance redress mechanism, and thereby disrupt construction works. The local construction industry may not be mature enough to absorb the PBM concept, properly assess the risks, and accurately price their services.

11 The project closing date will be extended by 2 years (i.e. 31 December 2025), for which approval will be sought

separately.

29

Results Chain Performance Indicators with

Targets and Baselines Data Sources and

Reporting Risks

4b. New 16 km, two-lane

bypass road from Bakursikhe to Tsnori constructed by 2022, with an international roughness index of 3.0 m/km or less (2019 baseline: 0 km)

Key Activities with Milestones

Output 1: New bypass road skirting Batumi constructed

1.1 Complete payment for compensation and relocation of affected people with no dispute or complaint by June 2017.

1.2 Complete bid evaluation for civil works contract by July 2017. 1.3 Award civil works contract by August 2017. 1.4 Recruit supervision consultants by September 2017. 1.5 Complete payment for compensation and relocation of all affected people by August 2019. 1.6 Complete civil works by December 2021.

Output 2: Routine and periodic maintenance carried out using PBM contracts

2.1 Recruit PBM design consultants by December 2019. 2.2 Complete engineering design and procurement packaging by April 2020. 2.3 Award PBM contracts by June 2020. 2.4 Recruit supervision consultants by June 2020. 2.5 Complete PBM contracts by June 2023.

Output 3: Detailed engineering design, EIA, detailed LARP, and bidding documents for Batumi Bypass–Sarpi road endorsed

3.1 Approve variation to consultant’s contract to change financing source for Batumi Bypass–Sarpi activity 2 by June 2019.

3.2 Complete Batumi Bypass–Sarpi activity 2 by February 2020. Output 4: New Poti Bridge and approach roads, and new Bakurtsikhe–Tsnori road constructed

4.1 Complete payment for compensation and relocation of affected people with no dispute or complaint by March 2020.

4.2 Complete bid evaluation for civil works contract for Poti Bridge by February 2020 and for Bakurtsikhe–Tsnori Road by March 2020.

4.3 Recruit supervision consultants by April 2020. 4.4 Award civil works contracts by April 2020. 4.5 Complete payment for compensation and relocation of all affected people by May 2020. 4.6 Complete civil works by June 2022.

Inputs ADB: €108,190,000 ($114.0 million equivalent [loan]) AIIB: $114.0 million (loan) Government: $87.2 million

Assumptions for Partner Financing Not applicable.

ADB = Asian Development Bank, AIIB = Asian Infrastructure Investment Bank, EIA = environmental impact assessment, EWH = East–West Highway, km = kilometer, m = meter, LARP = land acquisition and resettlement plan, PBM = performance-based maintenance. Source: Asian Development Bank.

B. Monitoring

57. Project performance monitoring. RD will require the Engineer to (i) collect additional data from relevant agencies, including local governments and statistics bureaus, (ii) to measure

30

the performance indicators at inception, at completion, and 3 years after project completion; and (iii) report key findings quarterly to ADB through the project’s quarterly project reports. 58. Compliance monitoring. RD will provide an annual report on the project’s compliance with legal, financial, economic, environmental, social and other covenants. 59. Safeguards monitoring. RD will monitor the implementation of the environment and resettlement action plans. The quarterly report will include the status of these plans. The environmental management plan (EMP) will be monitored and reported to ADB bi-annually with the assistance of supervision consultant team, the performance and results of which (through EMP reports) will be uploaded in ADB website. Construction environmental monitoring is a day to day process, which ensures that departures from the EMP are avoided or quickly rectified, or that any unforeseen impacts are quickly discovered and remedied. Specific actions in the EMP that are to be monitored are included in the environmental impact assessment. These include the preparation of plans for aspects of the work, such as construction camps, borrow pits and quarries, establishing crusher and asphalt facilities, and a site safety plan, which need to be completed and approved during the preconstruction phase. Also included are air, noise, and water quality monitoring parameters as required in the EIA report, and regular monitoring of the condition of the road surface, bridges, culverts, drainage structures and slope protection structures. In addition, information on the locations, type and consequences. If there are any unforeseen safeguards impacts or incidents these will be reported to ADB immediately for necessary action. RD will engage individual consultants for periodic inspection and reporting on safeguard matters.

60. Gender and social dimensions monitoring. RD, through the supervision consultant, will monitor the impact on gender and social dimensions through regular quarterly reports. 61. Information leaflets prepared and disseminated during previous training sessions to workers and residents in the project area to counter the spread of socially transmitted diseases will be continued and monitored by the RD and the Engineer. C. Evaluation

62. Within 6 months of physical completion of the Project, RD will submit a project completion report to ADB.10F11F

12 D. Reporting

63. RD will provide ADB (i) monthly progress reports (by the 10th of the following month) in the format acceptable to ADB; (ii) consolidated annual reports including (a) physical and financial progress, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. E. Stakeholder Communication Strategy

64. Extensive consultations were conducted at various stages of social and resettlement project preparation including feasibility study, initial environmental examination, cadastral survey

12 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar

31

of affected lands, land census survey, socioeconomic survey, and targeted consultation meetings with affected people and local stakeholder organizations and individuals. Community consultations were held through focus group discussions at various locations. The consultations will continue throughout the project cycle. A resettlement information leaflet containing information on compensation, entitlement, and resettlement management adopted for the project will be made available in the local language(s) and distributed to affected persons. Each affected person will be provided information regarding specific entitlements. Information sharing on LARP entitlement will be shared at the village level through consultation and through formal public consultation during the public hearing. The summary LARP will be translated into the local language (Georgian) and disclosed to affected persons at the local level. A copy of the LARP will be available at RD. The same will be available for the affected persons as and when asked for.

X. ANTICORRUPTION POLICY

65. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project. 11F12F

13 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.12F13F

14 66. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the project.

XI. ACCOUNTABILITY MECHANISM

67. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism. 13F14F

15

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

68. All revisions and/or updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM, including revision to contract awards and disbursement s-curves. Date Revisions

28 March 2017 Original version (loan approval date)

13 June 2017 • Disbursement arrangements for AIIB financing share

• AIIB loan terms

20 February 2018 • Specify the current of advance account which is in EURO

• Change imprest account to advance account

13 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 14 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp 15 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

32

Date Revisions

23 August 2019 Major change in scope for Board approval

• Update project description to add new scope

• Update overall implementation plan

• Update key persons involved in implementation

• Revise cost tables

• Revise allocation and withdrawal of loan proceeds for ADB

• Revise contract and disbursement s-curve

• Update safeguards

• Revise design and monitoring framework

• Update procurement plan

Appendix 1 33

PROCUREMENT PLAN

Basic Data Project Name: Batumi Bypass Road Project

Project Number: 50064-001 Approval Number: 3520/8328

Country: Georgia Executing Agency: Ministry of Regional Development and Infrastructure of Georgia

Project Procurement Classification: Category A Implementing Agency: Road Department - Ministry of Regional Development and Infrastructure

Project Procurement Risk: High

Project Financing Amount: US$ 315,200,000 ADB Financing: US$ 114,000,000 Cofinancing (ADB Administered): US$ 114,000,000 Non-ADB Financing: US$ 87,200,000

Project Closing Date: 31 December 2023

Date of First Procurement Plan: 28 March 2017 Date of this Procurement Plan: 11 September 2019

Advance Contracting: Yes

e-GP: No

A. Methods, Thresholds, Review and 18-Month Procurement Plan 1. Procurement and Consulting Methods and Thresholds

Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works Method Threshold Comments

International Competitive Bidding for Works

US$ 5,000,000 and Above Prior review required

Consulting Services Method Comments

Least-Cost Selection for Consulting Firm Prior review required Quality- and Cost-Based Selection for Consulting Firm Prior review required Individual Consultant Selection for Individual Consultant Prior review required

2. Goods and Works Contracts Estimated to Cost $1 Million or More

The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months.

Package Number General Description Estimated

Value Procurement

Method Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

BBRP/CW/ICB-02

Performance-Based Maintenance Package

10,850,000.00

ICB Prior 1S2E Q2 / 2020 Prequalification of Bidders: N Domestic Preference Applicable: N Advance Contracting: Y Bidding

34 Appendix 1

Package Number General Description Estimated

Value Procurement

Method Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

Document: Large Works

BBRP/CW/ICB-03

Construction of Poti Bridge and Approach Roads

22,000,000.00

ICB Prior 1S1E Q3 / 2019 Prequalification of Bidders: N Domestic Preference Applicable: N Bidding Document: Large Works

BBRP/CW/ICB-04

Construction of Bakurtsikhe-Tsnori Road

29,000,000.00

ICB Prior 1S1E Q3 / 2019 Prequalification of Bidders: N Domestic Preference Applicable: N Bidding Document: Large Works

3. Consulting Services Contracts Estimated to Cost $100,000 or More

The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months.

Package Number General Description Estimated

Value Recruitment

Method Review (Prior/ Post)

Advertisement Date

(quarter/year) Type of

Proposal Comments

BBRP/CS/ICS-08

Consultant A - Team Leader/Engineer

100,000.00 ICS Prior Q3 / 2019

Assignment: International Expertise: Performance-based contracting

BBRP/CS/QCBS-02

Supervision Consultant for PBM Contracts

2,000,000.00 QCBS Prior Q3 / 2020 FTP

Assignment: International Quality-Cost Ratio: 90:10 Advance Contracting: N Comments: Contract type or consulting inputs will be based on PBM design

BBRP/CS/QCBS-03

Supervision Consultant for Poti Bridge

2,000,000.00 QCBS Prior Q3 / 2019 FTP

Assignment: International Quality-Cost Ratio: 90:10

Appendix 1 35

Package Number General Description Estimated

Value Recruitment

Method Review (Prior/ Post)

Advertisement Date

(quarter/year) Type of

Proposal Comments

BBRP/CS/QCBS-04

Supervision Consultant for Bakurtsikhe-Tsnori

2,000,000.00 QCBS Prior Q3 / 2019 FTP

Assignment: International Quality-Cost Ratio: 90:10

4. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000 (Smaller Value Contracts)

The following table lists smaller-value goods, works and consulting services contracts for which the activity is either ongoing or expected to commence within the next 18 months.

Goods and Works

Package Number

General Description

Estimated Value

Number of Contracts

Procurement

Method

Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

None

Consulting Services

Package Number

General Description

Estimated Value

Number of Contracts

Recruitment Method

Review (Prior/ Post)

Advertisement Date

(quarter/year) Type of

Proposal Comments

BBRP/CS/ICS-09

Consultant B - Contract Specialist

46,000.00 1 ICS Prior Q3 / 2019

Assignment: International Expertise: contract management

BBRP/CS/ICS-10

Consultant C - Environmental Specialist

4,800.00 1 ICS Prior Q3 / 2019

Assignment: National Expertise: environment

B. Indicative List of Packages Required Under the Project

The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period).

Goods and Works Package Number

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Review (Prior/Post)

Bidding Procedure

Comments

None

Consulting Services

Package Number

General Description

Estimated Value

Number of Contracts

Recruitment Method

Review (Prior/ Post)

Type of Proposal Comments

None

C. List of Awarded and On-going, and Completed Contracts

The following tables list the awarded and on-going contracts, and completed contracts.

36 Appendix 1

1. Awarded and Ongoing Contracts

Goods and Works

Package Number

General Description

Estimated Value

Awarded Contract

Value Procurement

Method Advertisement

Date (quarter/year)

Date of ADB Approval of

Contract Award

Comments

RCIP/CW/ICB-04

Construction of Batumi Bypass Road, Section km -1+000 – 13+325

190,300,000.00 120,290,017.00 ICB Q4 / 2016 30-JUN-17 Contract signed on 29 August 2017. Partly financed by AIIB (L8328).

Consulting Services

Package Number

General Description

Estimated Value

Awarded Contract

Value Recruitment

Method Advertisement

Date (quarter/year)

Date of ADB Approval of

Contract Award

Comments

BBRP/CS/LCS-01

Financial Auditor 35,000.00 25,277.78 LCS Q3 / 2018 26-OCT-18 Contract signed on 8 November 2018. Partly financed from L3524, L3715 and new project(s).

BBRP/CS/QCBS-01

Construction Supervision for Batumi Bypass Road

7,000,000.00 7,353,263.00 QCBS Q4 / 2016 07-SEP-17 Contract signed on 11 September 2017. Partly financed by AIIB (L8328).

BBRP/CS/ICS-06

Contract Manager 36,000.00 36,728.93 ICS Q4 / 2018 24-DEC-18 Contract signed on 3 January 2019.

BBRP/CS/ICS-07

Environment Specialist

22,000.00 22,002.20 ICS Q2 / 2019 13-MAY-19 Contract signed on 16 May 2019.

BBRP/CS/ICS-01

External Monitoring Consultant (Resettlement)

20,000.00 20,000.00 ICS Q4 / 2017 07-DEC-17 Contract signed on 11 December 2017.

BBRP/CS/ICS-03

Project Implementation Specialist

33,000.00 27,697.99 ICS Q1 / 2018 03-AUG-18 Contract signed on 7 August 2018.

BBRP/CS/ICS-04

Project Implementation Specialist

38,700.00 37,565.98 ICS Q1 / 2019 29-MAR-19 Contract signed on 1 April 2019

BBRP/CS/ICS-05

Road Asset Management Specialist

22,000.00 27,492.67 ICS Q4 / 2018 07-DEC-18 Contract signed on 11 December 2018. Partly financed from L2843.

RCIP/CS/QCBS-16

Preparation of the Feasibility Study, Detailed Engineering Design, EIA, Detailed LARP and Bidding Documents for Construction of Batumi Bypass-Sarpi (Border of Turkey) Section of the International E70 Road

3,000,000.00 2,878,140.83 QCBS Q2 / 2016 29-SEP-17 Contract was signed on 24 October 2017. Activity 1 financed from L2843 and Activity 2 financed from L3520.

Appendix 2 37

DRAFT TERMS OF REFERENCE OF CONSULTANTS A. CONSTRUCTION SUPERVISION CONSULTANT FOR BATUMI BYPASS ROAD PROJECT

1. Background Georgia has applied for financing from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) towards the cost of the Batumi Bypass Road Project and intends to apply part of the proceeds of this financing to procure consulting services for supervision of the construction of the Project. The Ministry of Regional Development and Infrastructure of Georgia (MRDI) will be the project executing agency and the Roads Department of Georgia (RD) will be the implementing agency. Georgia is located south of the Caucasus mountain range, with Russia to the north, Armenia and Turkey to the south, Azerbaijan to the east, and the Black Sea to the west. It has a population of 3.7 million. Georgia, due to its geographic location, provides the shortest transit link between Central Asia and Europe. Hence, transport plays a pivotal role in supporting the national economy, and development of the transport sector is vital to increasing economy of the region through reduced transport costs and increased transit revenues. The 81 km Poti – Batumi – Sarpi road along the western coast of the country, mostly located in the Ajara Autonomous Republic, is a key highway and international transit route in Georgia. It is connected to the major Black Sea ports of Georgia, viz. Batumi and Poti, and a number of beach resorts including Batumi and Kobuleti. Due to heavy traffic on this road there has been significant increase in traffic congestion and accidents particularly at Batumi and Kobuleti especially during the tourist season. The project road, bypassing the city of Batumi from East, is entirely located in Khelvachauri District and generally follows a new alignment through relatively densely populated areas. The project road starts at km 91 of the Senaki-Poti-Sarpi road, behind the Southern portal of the existing motorway tunnel at the approach of village of Makhinjauri. The Batumi bypass ends at km 48+470 (Project Chainage 16+170) by joining with the existing Poti-Batumi-Sarpi road. The length of the Batumi Bypass section is 16,170 m. The road design was carried out in accordance to the Georgian standard on ‘Geometric and Structural Requirements for Highways in Georgia. To improve shortcomings in the national standard, references has been made to relevant clauses of AASHTO standards. The main project design parameters are:

• Design speed: 100 km/h

• Number of lanes: 2

• Lane width: 3.50 m

• Carriageway width: 7.00 m

• Shoulder width: 3.5 m of which 2.5 m paved and 1.0 m unpaved

• Total road width: 14 m

• Min. carriageway cross-fall: 2.5 %

• Max. superelevation: 7 %

• Min. horizontal curve radius: 450 m

38 Appendix 2

• Max. vertical grade: 5 %

• Min. vertical crest radius: 10,000 m

• Min. vertical sag radius: 4,900 The project road includes 5 tunnels; length of tunnels is 542.0m~1,067.0m (total 3,808.0 m including portal and cut and cover tunnels). This project road also includes 21 bridges with a total length of 4256.4 m. There are seven bridges that are 200 meters or more in length. The project road is to be constructed through a single civil works contract, procured in accordance with ADB’s Procurement Guidelines. Civil works procurement is proceeding concurrently with finalizing financing for the project’s implementation and with selection of the construction supervision consultant. 2. Objectives of the Assignment

The main objective of the consultancy services is to ensure that high quality construction is achieved and that all works are carried out in full compliance with the engineering designs and technical specifications described in the civil works contracts and that all efforts are deployed by the contractor to complete the construction within the contractual time schedule. 3. Scope of Services, tasks and expected deliverables

The primary objectives of the consulting services are:

• Construction supervision: function as the Engineer in administering the civil works contract in accordance with the Conditions of Contract and advise the Employer on all matters concerning administration and implementation of the contract including quality control, work progress, and dispute resolution; and

• Review of design: Review the contract designs, in particular bridges and tunnels and recommend improvement or changes, if necessary;

Within three months of the commencement of the project’s civil works, review the designs for three of the intersections on the project road (Intersections 2, 3, and 4), and, based on traffic and other studies, (i) prepare simplified designs for some or all of these intersections, based on relevant international practice; (ii) discuss the designs with the Employer and ADB and thereafter prepare final designs; and (iii) introduce these designs into the civil works contract as replacements for the designs presently incorporated in the civil works contract documents, through an appropriate contract variation. In undertaking this task the consultant will ensure to the extent possible that all of the work elements included in the new intersection designs are present in the civil works contract as signed.

4. Duties and Responsibilities of the Supervision Consultant

As Engineer for the contract, the Consultant will undertake all of the duties required of the Engineer to ensure that the contracts are constructed and completed in accordance with their provisions. The main tasks of the Consultant will include but are not limited to the following:

Appendix 2 39

• reviewing the project’s detailed designs to identify any significant aspects that require amendment before construction commences, and inform the Employer of these for its decision as to whether changes to the designs are to made.

On the basis of this review, and the Employer’s decisions, accepting the designs as suitable for construction;

• ensuring that the contractors’ topographical survey and cross sections to be used for working drawings, as-built drawings and measurement purposes comply with the requirements of the specifications;

• checking and approving the contractors’ construction methods and program for both temporary and permanent structures;

• developing a comprehensive system of inspection checking and recording to ensure compliance of all works with the specifications;

• developing interim and final measurement and payment systems; establishing a monitoring system for costs to date, and costs to completion; providing a system for the preparation of interim and final payment certificates; providing advice on the evaluation of claims and extensions of time; providing advice on the preparation of variation orders, and for monitoring variation orders; establishing a claims monitoring, evaluation and reporting system; and assisting and advising the Employer on all matters pertaining to the contracts and to disputes;

• providing day-to-day supervision and inspection of works on site; maintaining by the supervision staff of a site diary covering all contractors’ activities, and recording site conditions;

• prior to commencement of works, approving of the contractors’ construction plans including traffic management and traffic control arrangements, proposed public and private haul and access routes, together with the contractors’ arrangements for maintenance and reinstatement of the same, borrow locations, working areas, materials stockpile areas, materials mixing, and processing areas, etc.;

• reviewing, commenting upon, and accepting the contractors’ quality assurance plans and procedures; assisting the contractors with establishing on-site and laboratory based quality control, testing, and reporting procedures for all construction, workmanship, and materials; supervising the contractors in implementation of the quality assurance plans;

• together with the contractors, and public utility agencies, identifying all utility services (electricity, telecommunication, and water), if any, within the right-of-way that are to be protected and marked to avoid damage, or relocated, as required by the works;

• assisting the RD in implementing and monitoring the project’s land acquisition and resettlement plan;

• receiving, commenting on and ultimately approving the contractors’ environmental management plan, based on the approved project environmental management plan;

40 Appendix 2

• monitoring the contractors’ programs and costs to completion and providing advice to the Employer on procedures necessary to complete the works within the time and cost stated in the works contract;

• preparing reports and providing assistance, as necessary and as required, to the Disputes Board and during any subsequent arbitration procedures;

• conducting on-site workshops and providing comprehensive technical guidelines to staff of the RD, and to the national consultants, in contract administration, measurement and certification, construction supervision, quality control, in-situ and laboratory testing and reporting, monitoring and appliance of environmental and social safeguards; monitoring and implementation of the resettlement plan, and other activities as required;

• conducting monthly Contract Site Meetings (technical meetings), to be attended by representatives of the Employer and the contractor; attending and discussing any technical issues raised and to be determined during the week;

• conducting monthly Contract Site Meetings (progress meetings), to be attended by representatives of the Employer and the contractor; attending and making presentations at progress coordination meetings and similar progress reviews;

• providing the Employer with complete records and assisting the contractor with providing “As Built” drawings for the contracts; certifying completion and taking over of part or all of the works; and

• preparing Final Payment Certificates, Taking Over Certificates, and Performance Certificates, to the timing of, and as required by, the contract, and advising the Employer on the release of all contractors’ securities and retentions.

In addition to the above tasks, the consultant will also undertake additional tasks, including but not limited to the following:

• review and approve the contractor’s proposed tunnel excavation methodology, including the contractor’s blasting program for those sections of the tunnels that are to be constructed using drill and blast techniques. In undertaking this task, the consultant will pay particular attention to ensuring that blasting-related vibrations do not exceed the limits defined in the specification, to avoid damage to residences and other structures located close to the tunnel alignments.

• conducting road safety audits at pre-construction, in-construction and post-construction stages; and on the basis of those audits, direct the contractor to implement such additional works as may be necessary to ensure the completed road meets appropriate internationally-accepted road safety standards;

• undertaking redesign of several of the project road intersections, as above;

• preparing progress reporting as required and as defined in this TOR;

Appendix 2 41

• assisting the Employer as required with preparing withdrawal applications for disbursements from the ADB and AIIB loans for the project; and

• providing on-the-job training for the Employer’s counterpart staff.

Duration of the Assignment The consultancy services are required for 30 months for construction supervision and on an intermittent basis over 36 months during the defects notification period of the civil works contract. The consultancy services contract is expected to commence in April 2017. Support Resources, Equipment, and Others All supplies and equipment necessary for the supervision services are to be provided by the Consultant. However, site office and laboratory space, as well as minimum office equipment will be provided by the Contractor. The Consultant shall assume all accommodation and transport expenses including expenses for field works and site office maintenance and consider these expenses in the financial proposal accordingly. 5. Team Composition and Qualification Requirements for the Key Experts

International Consultants The international consultants will be:

(i) The Team Leader/Highway Engineer will be the Engineer’s Representative, and be responsible for coordinating the inputs and the activities of the international and national specialists. He will also assist the Employer in:

• developing and implementing a computer-aided contract management system for monitoring the civil works contract and overall project implementation, and generating monthly progress reports;

• organizing, coordinating, and monitoring the construction supervision activities in accordance with the civil works contract;

• assist in settling contractor’s claims;

• reviewing and certifying variation orders, contractor’s applications for subcontracting parts of the works, and monthly payments to the contractor for submission to the Employer.;

• preparing documents and progress reports to be submitted to the Employer and ADB; and

• monitor performance, deadlines, project progress, as well as conduct seminars, assess training impacts and assist in the development of a risk management plan to avoid any unexpected incidence that may have a negative impact on project quality or completion.

(ii) The Highway/Pavement engineer will assist the Team Leader/Highway Engineer

in supervising the project’s construction. (iii) The Highway Design Engineer will review the road design provided in the

contract, particularly design for three of the intersections on the project road (Intersections 2, 3, and 4), and, based on traffic and other studies, prepare simplified designs for some or all of these intersections, based on relevant

42 Appendix 2

international practice and discuss the designs with the Employer and ADB and thereafter prepare final designs.

(iv) The Bridge Engineer will review the bridge designs provided in the contract,

oversee the bridge construction supervision, implement quality control procedures, and train the national site engineers on bridge construction supervision procedures.

(v) The Tunnel Engineer will review the final tunnel designs, oversee tunnel

construction supervision, including reviewing the contractor’s tunnel excavation by blasting program to ensure compliance with vibration limits and other specified environmental aspects of the tunnel works, review the safety procedures set up by the contractor, set up a risk management plan, and train the national engineers on tunnel construction supervision procedures.

(vi) The Contracts Specialist will shall assist the Team Leader/Highway Engineer in

administering the contract and assisting in the evaluation of claims and disputes. (vii) The Environmental Specialist will carry out environmental monitoring and

management of project implementation and help ensure the implementation of environmental management practices at each stage of construction. Specifically the Environment Specialist will ensure that the provisions of the approved Environmental Management Plan are reflected in the contractor’s contract specific environmental management plan (CSEMP) prior to its acceptance by the Engineer, the Employer, and ADB, and thereafter ensure that the contractor complies in every respect with the provisions of the CSEMP. The specialist will develop an environmental auditing protocol for the construction period, regularly supervise the environmental monitoring, and submit periodic reports based on the monitoring data and laboratory analysis reports. The specialist will also develop a program for hands on training of contractor’s staff in implementing the CSEMP.

(viii) The Social/Resettlement Specialist will be responsible for the development and

implementation of the Project Monitoring System (PMS) and monitoring and evaluating HIV/AIDS/STI prevention programs and transmittable disease detection and prevention programs.

(ix) The Quality Control Specialist will oversee detailed testing and inspection of the

materials and samples of all construction activities and materials required for the project, to ensure compliance with the contract designs and specifications.

In-country training programs will be submitted to ADB for review and concurrence. The international consultants will conduct workshops in their fields of expertise.

National Consultants The national consultants will be composed of graduate engineers or the equivalent, with at least 5 years of practical experience in supervision and administration of major road, bridge, and tunnel contracts. National consultants have to support international consultants and will act according to their instructions. Each national consultant will be responsible for his/her specific task assigned.

Appendix 2 43

(i) Deputy Team Leader/Highway Engineer – will assist the international Team Leader in all aspects of management of the supervision assignment.

(ii) Highway Supervising Engineers – will assist/support the international Highway Engineer in implementing the supervision services.

(iii) Bridge/Structure Supervising Engineers –will support the international bridge

engineer to review the final bridge designs, review and approve the contractor’s method statements and working drawings, oversee the bridge construction supervision, and implement quality control procedures.

(iv) Tunnel Supervising Engineer – responsibility will include assisting the

international tunnel engineer in reviewing the final tunnel designs, oversee the tunnel construction supervision, and review the environmental management and safety procedures set up by the contractor.

(v) Pavement Engineer – will be responsible to the international highway engineer

for supervising pavement construction.

(vi) Geotechnical Engineer – will be responsible to the Team Leader for overseeing the contractor’s geotechnical surveys and analysis.

(vii) Quality Control Specialist – will carry out the detailed inspection and testing of all

materials to be incorporated in the works.

(viii) Road Safety Engineer – will assist the international team and will provide additional input to inspect the completed works before the facilities are opened.

(ix) Environmental Specialists – will work with the international environmental

specialist in to ensure that the project is constructed in accordance with the contract’s environmental provisions.

(x) Social Specialists – will work with the international social specialist in

implementing the project’s HIV/AIDS/STI prevention and other social programs.

(xi) Contract Specialist – will assist the Team Leader and International Contract Specialist in mitigation of day-to-day contractual issues that arise during implementation of the works,

Project Monitoring System The consultants will be responsible for the development and implementation of the Project Monitoring System (PMS) and will initially collect and analyze a set of indicators for evaluating project performance against project objectives, purposes, and outputs. The indicators set out in project documents will be reviewed and a baseline survey will be conducted at the beginning of project implementation to collect data not already supplied. National consultants will be recruited to conduct follow-up surveys at project completion, and one year after completion. Data collected during and after implementation will be compared with the baseline data and the target values to be established by the Employer and agreed upon with the ADB before the works start. The main indicators to be monitored include (i) economic development and poverty indicators at the municipality level and for each county in the project area; (ii) transport costs and time for

44 Appendix 2

specific types of vehicles and trips; (iii) transport services and charges; (iv) air quality; (v) changes in producer prices, and (vi) jobs created during construction and maintenance. Where relevant, indicators will be differentiated by gender. The data collection method will consist of (i) reviewing secondary data from local government statistics; (ii) conducting household socioeconomic sample surveys; and (iii) developing participatory rural appraisal methods among communities affected by the bypass roads. About 24 person-months of national consultants specializing in socioeconomic and transport fields will be required to develop and implement the PMS. 6. Reporting Requirements and Time Schedule of Deliverables

The monthly reports will provide a description of the activities, progress charts, expenditure records, and implementation-related issues and suggested remedial actions. It is to be in a format agreed with the Employer and ADB prior to date on which the first monthly report is to be submitted. All the reports will be submitted as follows, and will also be transmitted to the Employer and ADB by email using an appropriate large file transfer application.

Languages

English Georgian

Original 1 1

Copy 2 2

Diskette/CD 1 1

Inception Report The Inception Report will illustrate the planning that the Consultants will have established for the assignment. It will also describe the staffing and remarks of the Consultants regarding the assignment as deemed appropriate. This Report will outline how the Consultant intends to implement the project, clearly differentiating between the activities for supervision of the construction. The Inception Report must be submitted within three (3) months following the signature of the supervision contract. Monthly Reports Not later than the 20th of each month, the Consultants will prepare a progress report summarizing the work accomplished on the project during the preceding month, including problems encountered and recommended remedies. The report should record the status of payment of the contractors' monthly certificates, of all claims for cost or time extensions, and of actions required by employer to permit unimpeded works implementation. A copy of the minutes of the weekly meetings with the contractors will be attached to the monthly reports. Below is a draft outline for the report. The Engineer in the inception report will propose the monthly report format, which is to include:

• Physical progress related to program and time;

• Explanations for variances to the above;

• Expenditure related to cash flow forecast and budget;

• Explanations for variances to the above;

• Claims or disputes;

• Human resources, mechanical equipment and materials;

Appendix 2 45

• Testing and quality control;

• Stakeholder issues;

• Environmental management plan and, as appropriate the Land Acquisition and Resettlement Plan

• A revised Cash Flow forecast.

• Annexes, including meeting minutes, site photographs, etc. Quarterly Reports The Engineer will prepare a comprehensive report summarizing all supervision activities at the end of each quarter and not later than the 20th day of the month following the end of the report quarter, including the progress of the Contract, contract variations and change orders, environmental management and training activities, the status of Contractor claims, if any, brief descriptions of problems encountered and other relevant information. The Engineer will submit a draft format for this report in the inception report. Completion Report The Consultant will prepare the Draft Completion Report within 1 month after the completion of all the works. The Draft Completion Report will provide an overview of the project. The Report will be in a format agreed with the Employer and ADB and will include, but not limited to:

• overall review of the project;

• physical progress related to the original program;

• explanation for variances to the above; and

• expenditure related to original budget; Required Expertise The Consultant will provide the following specialists, as a minimum:

Table 1: Summary of Key Experts (International)

Consultant No. Person-Months

1.Team Leader /Highway Engineer 1 33

2. Highway/Pavement Engineer 1 30

3. Highway Design Engineer 1 3

4. Bridge Engineer 1 24

5. Tunnel Engineer 1 30

6. Contracts Specialist 1 12

7. Environmental Specialist 1 12

8. Social/Resettlement Specialist 1 12

9. Quality Control Specialist 1 30

TOTAL 9 186

Table 2: Summary of Key and Non Key Experts (National)

Consultant No. Person-Months

1. Deputy Team Leader/Highway Engineer 1 33

46 Appendix 2

Consultant No. Person-Months

(key)

2. Highway Supervising Engineers 4 120

3. Bridge/Structure Supervising Engineers 4 120

4. Tunnel Supervising Engineer 1 30

5. Pavement Engineer 1 30

6. Geotechnical Engineer 1 30

7. Quality Control Specialists 1 30

8. Road Safety Engineer 1 12

9. Environmental Specialist 1 30

10. Social Specialist 1 24

11. Contract Specialist 1 18

TOTAL 17 477

Qualification Requirements of Key Experts A. Key Experts (International) Team Leader /Highway Engineer - The Team Leader/Highway Engineer must have expertise in all aspects of highway supervision with experience in leading a team of multi-discipline experts. The team leader will have overall responsibility for implementing the project and managing the international and national team of consultants. He/she should be qualified civil engineer, with preferably with 15 years of relevant experience including 5 years of international experience covering construction supervision projects in various countries. He should have good communication and reporting skills. He/she will have an excellent knowledge of the English language. Highway/Pavement Engineer – Must be a qualified civil engineer, familiar with the supervision of urban and rural highways or other major road schemes incorporating major bridges, tunnels

and major grade separated interchanges, preferably with 15 years’ experience including 5 years

of international experience and preferable having experience in the region. He/she will have an excellent knowledge of the English language. Highway Design Engineer – Must be a qualified civil engineer, familiar with the design of urban arterial roads and intersections, preferably with 10 years of relevant experience, of which preferably 3 or more years have been in environments similar to that of the project. He/she will have a excellent knowledge of the English language. Bridge Engineer - The Bridge Engineer must be a qualified structural engineer preferably with

15 years’ experience in bridge and structure engineering, including 5 years of international

experience. The candidate should have a thorough understanding and experience with international standards and modern bridge construction. He/she will have an excellent knowledge of the English language. Tunnel Engineer – The Tunnel Engineer must be a qualified civil engineer or equivalent

preferably with 15 years’ experience in tunnel construction/rehabilitation in mountainous areas

including works supervision preferably with 5 years of international experience. The candidate should have a thorough understanding and experience with international standards and “best

Appendix 2 47

practices”, and of modern tunnel construction technology. He/s he will have an excellent knowledge of the English language. Contracts Specialist – The Contracts Specialist must be a qualified civil engineer or equivalent preferably with 15 years’ experience, preferably including 5 years of international experience in the preparation of contract documents and specifications for major road or infrastructure projects using FIDIC, as well as dealing with claims and disputes. He/she will have an excellent knowledge of the English language. Environmental Specialist – The Environmental Specialist must have an appropriate university

degree, preferably with 15 years’ experience, preferably including 5 years of international

experience and familiarity with all aspects of environmental management and with significant experience in environmental management and monitoring of projects, environmental assessment and/or implementation of environmental mitigation measures during construction, preferably for projects financed by ADB or other international development agency. He/she will have an excellent knowledge of the English language. Social/Resettlement Specialist - The specialist preferably with 15 years of work experience preferably including 5 years of international experience should have up-to-date knowledge of ADB’s safeguards policies and procedures, particularly on social impact assessment, poverty assessment, land acquisition, and resettlement, preferably with a master’s degree in social science. He/she will have an excellent knowledge of the English language.

Quality Control Specialist – The Quality Control Specialist preferably with 15 years’ experience preferably including 5 years of international experience in assistance in all the phases of quality assurance process of Construction. The candidate should have a thorough understanding and experience with international standards and “Best Practices” of modern Quality Control technology. He/she will have an excellent knowledge of the English language B. Key Expert (National) Deputy Team Leader/Highway Engineer - Should be familiar with the supervision of urban and rural highways construction or other major road schemes incorporating major bridges,

tunnels and major grade separated interchanges, preferably with 10 years’ experience in

Supervision of Civil works

Field of expertise No. Total Person

Months

1. Deputy Team Leader/Highway Engineer 1 33

C. Non-Key Experts (National) The national consultants will be composed of graduate engineers or the equivalent, with 5 years of practical experience in supervision and administration of major road, bridge, and tunnel contracts. National consultants have to support international consultants and will act according to their instruction. Each national consultant will be responsible for its specific task assigned.

Field of expertise No. Total Person

Months

Minimum Qualification Requirements

Area of specialization Special skills and

knowledge

1. Highway 4 120 Civil Engineering - • Experience in

48 Appendix 2

Field of expertise No. Total Person

Months

Minimum Qualification Requirements

Area of specialization Special skills and

knowledge

Supervising Engineers

Highway Design and Construction

supervision projects as highway/road engineer

2. Bridge/Structure Supervising Engineers

4 120 Civil Engineering -Structural Engineering

• Experience in supervision projects as a bridge engineer

3. Tunnel Supervising Engineer

1 30 Tunneling • Experience in

supervision projects as tunnel engineer

4. Pavement Engineer

1 30 Civil Engineering -Asphalt Pavement Design

• Experience in supervision of projects as pavement/materials engineer

5. Geotechnical Engineer

1 30

Civil Engineering -Geotechnical Engineering and Soil Mechanics

• Experience in supervision of projects as geotechnical engineer including laboratory and in-situ testing

6. Quality Control Specialist

1 30 Construction Quality Management

• Experience in Quality assurance and Quality control. Materials testing

7. Road Safety Engineer

1 12 Safety Engineer

• Experience in supervision of construction projects in the position of safety expert

8. Environmental Specialist

1 30 Environmental Science -environmental impact assessment

• Experience as environmental specialist including water and air quality analysis, environmental mitigation measure ant etc.

9. Social Specialists 1 24 Social Science -household and user surveys

• experience as social specialist and preparing LARP

10. Contract Specialist

1 18 Contract Management

• Experience of associated with contractual claims and disputes and project coordination

TOTAL 16 444

D. Support Technical Staff The supervision team will be supported by Technical Staff comprising of Surveyors, Laboratory Technicians, Topographical Surveyors, Social Surveyors and Interviewers, Interpreters, Drivers, Translators, other support Technicians etc.

Appendix 2 49

7. Client’s Input and Counterpart Personnel

N/A Client will provide the following inputs, project data and reports to facilitate preparation of the Proposals: (list/ specify/ attach. If none, state N/A) N/A B. PERFORMANCE-BASED MAINTENANCE CONTRACT DESIGN CONSULTANTS

Design of Pilot Area-wide Performance-based Road Maintenance Contracts and Procurement Packaging

1. ASSIGNMENT OBJECTIVES

Objective of the assignment is development of bidding documents for an output and performance-based contract (suitable for ADB financing but with reference to the World Bank’s latest template for OPBC) in Georgia’s Mtskheta-Mtianeti region. For this purpose, the Roads Department (RD) of the Ministry of Regional Development and Infrastructure (MRDI) intends to engage two international and one national consultant to assist the RD with preparing the required bidding documents. The consultants are:

• Consultant - A. Engineer/Team leader (International)

• Consultant - B. Contract specialist (International)

• Consultant – C. Environmental Specialist (National)

The Consultants will work closely with the RD ’s counterpart staff to identify the most appropriate model for the contract or contracts by ensuring that the proposed format matches the ability of Georgia’s contracting industry, while utilizing an efficient mix of outcome and output elements.

2. PROJECT BACKGROUND

The institutional arrangements in the road sector of Georgia have undergone several changes since the country’s independence. Presently the Roads Department is a department within the Ministry of Infrastructure and Regional Development of Georgia. All road maintenance and rehabilitation activities as well as the supervision of routine, periodic maintenance and rehabilitation works are outsourced to the private sector based on transparent public tendering procedures. Traditional method-based two year contracts are utilized that specify the processes, materials, and quantities for the maintenance to be performed. The payments are made on the ad-measurement basis (BoQ based) for specified work activities. The Government of Georgia aims to reduce transport costs and improve sustainability of maintenance financing. For this purpose, the RD has piloted two road maintenance-contracting models:

1. Kakheti OPBC: five-year fully performance-based contract providing output-based

rehabilitation of 37.5km and performance-based routine and winter maintenance of 117

50 Appendix 2

km (with payment made upon meeting the specified performance indicators). Contract

started in April 2016.

2. Guria OPBC: five-year hybrid OPBC currently under preparation phase covering about

240 km with rehabilitation being paid using an ad-measurement approach, and routine

and periodic maintenance paid through a performance-based approach.

The RDI intends to implement a third OPBC pilot project under ADB financing and has identified the Mtskheta-Mtianeti area for this contract (see Figure 3.1 below), with a contract duration of 5 years. These TOR describe the services that the Consultants are expected to perform, counterpart support, facilities, baseline data on the road network to be included, qualification requirements for the Consultants, and schedule and reporting requirements. The proposed PBM is planned to be a hybrid contract including road rehabilitation, and periodic, routine and winter maintenance services. Detailed design for the road sections to be rehabilitated will be prepared in parallel with this assignment by an independent consulting firm hired by the RD and will become a part of the bidding documents for the PBM contract that the Consultants will prepare under these TOR.

3. SCOPE OF SERVICES

Major activities under scope of the project are provided below. Tasks will be carried out by the consultants indicated above in close cooperation with the RD’s counterpart staff. Distribution of work/input and responsibilities between the parties are provided in Part 4. Detailed Tasks/Activities include the following, and such other activities as may be necessary to achieve the objectives of the assignment.

1. Detailed technical assessment of road network to be included in the scope of the PBM

2. Determining of adequate service levels for durability, comfort and safety. Including

requirements for winter maintenance;

3. Developing a program for initial repairs, periodic, routine and winter maintenance;

4. Developing a conceptual scope for periodic maintenance;

5. Developing cost estimates for the works, broken down into proposed contract packages,

and a cash flow model for the duration of the contracts;

6. Preparing the Bidding Documents;

7. Participating in the pre-bid meeting;

8. Assisting the RD in answering clarification questions;

9. Assisting the RD with finalizing the contracts ready for signature

The RD will provide assistance by assigning four counterpart staff including those working on the two ongoing PBM contracts. In addition, the RDMRDI will provide personnel and resource for field data survey, data processing and GIS.

Appendix 2 51

Map 3.1 Area and current condition of roads under the proposed PBM

Good: IRI<4, Fair: 4<IRI<6, Poor: 6 <IRI<8, Bad: IRI>8

Table 3.1 List of Roads within the proposed PBM area

Road ID Road Name Length SH-27 Tianeti-Zaridzeebi-Jhinvali 21.5km

SH-30 Tbilisi (Gldani) – Tianeti 60.0km

SH-43 Tianeti-Akhmeta-Khvareli-Ninigori 30.0km

SH-142 Sasadilo-Orkhevi-Khevsurtsopheli 27.0km

SH-148 Orkhevi-Sioni 3.7km

Total: 142.2 km

Note: Road SH43 Tianeti-Akhmeta red section with IRI>8 is currently under rehabilitation and it will require only routine maintenance works under the proposed PBM. Detailed design is being prepared for first 20km section of SH30 Tbilisi – Tianeti Road and its rehabilitation will be included in the scope of the proposed PBM.

4. DETAILED TASKS/ACTIVITIES

Detailed technical assessment of the road network to be included in the PBM (Consultant A-Team Leader/Engineer and RD)

Network assessment is to identify the volume, quantity, condition and location of road assets under the study area. The RD will provide a field survey vehicle with ROMDAS system equipped with laser IRI profilometers, 360-degree video logging system and GPS, and counterpart staff to operate the vehicle. For successful performance of this

52 Appendix 2

activity, the Consultant is expected to work closely with the counterpart staff to define a list of data items to be collected and ensure data quality by participation and leading the field surveys.

Determination of adequate service levels for durability, comfort and safety. Including requirements for winter maintenance (Consultant A-Team Leader/Engineer)

Methodology (i.e. tools and methods) to be applied to measure performance indicators for each contracted service/work activity should be simple and inexpensive. Performance is to be evaluated at four levels: asset management, asset condition, asset performance, reporting. Penalties for non-compliance are to be set for each indicator, to be deducted from scheduled payments to the contractor. The contract could Include the possibility of a reward mechanism to provide an incentive to the contractor to innovate and deliver high service standards.

The maintenance service standards will include performance indicators, compliance criteria and a payment adjustment system for non-compliance in relation to: (i) road usability, user comfort and safety, (ii) road durability, and (iii) safeguards compliance and (iv) management performance. For the condition-responsive periodic maintenance program, the Consultant will prepare conceptual technical designs and specifications for application of structural asphaltic concrete overlays (with a specified minimum thickness), micro surfacing and surface treatments, and rejuvenation / anti-skid seals, to be applied on appropriate road sections and bridge decks depending on measured conditions over the 5-year project period.

Develop a program for initial repairs, periodic, routine and winter maintenance (Consultant A-Team Leader/Engineer)

Based on the outputs of activities 4.1 and 4.2 above, develop a five-year work program for road network maintenance. The program should cover activities such as (a) initial repairs if required; (b) routine maintenance services (roads, bridges, other structures); (c) periodic resurfacing; (d) initial repair works which may be necessary to reach the required service level, (e) rehabilitation and improvement works related to safety and climate resilience, as required, (f) emergency works, and (g) winter maintenance

Develop Cost Estimates for the proposed works as well as a cash flow model for the duration of the implementation period (Consultant A-Team Leader/Engineer)

The Consultant will prepare a confidential cost estimate for the PBM, broken down into contract packages. This will be based on a detailed identification of all physical works and other activities (managerial, quality-control unit, safeguards compliance, risk assessment etc.) that a contractor would need to carry out to achieve and maintain the road condition at the pre-defined service levels. The cost estimate will be based on prevailing market rates demonstrated through recent or ongoing contracts in the country. The cost estimate will include estimates for: (a) initial repairs, if required; (b) routine maintenance services (roads, bridges, other structures); (c) periodic maintenance; (d) initial repair works which may be necessary to reach the required service level, (e) rehabilitation and improvement works related to safety and climate resilience, as required, (f) emergency works, (g) winter maintenance and (h) other services and actions, such as the contractor’s quality control system. The purpose of the confidential

Appendix 2 53

cost estimate is to obtain a benchmark price for the contract against which actual bid prices can later be compared. Specifically, the Consultant will be required to prepare the following cost estimates, noting that cost estimates for specific rehabilitation works will be prepared by a separate detailed design consultant, as above:

• The cost estimates for Initial Repairs will be prepared based on a detailed

inventory and condition survey of all road assets and estimated quantities of

required repair works (by specific item) in a unit price bill of quantities with

measurement of actual works to be performed during implementation.;

• The cost estimates of Periodic Maintenance works in terms of unit cost per km for

the given list of periodic road resurfacing options (and cost per meter for bridge

re-surfacing options) with notional lengths for each option;

• The cost estimate for Emergency Works will consist of unit price bill of quantities

(similar to a FIDIC-type contract Dayworks schedule) with nominal quantities;

• The cost estimate for road sections to be maintained will be prepared for the

entire 5 years of the PBM and is to include all maintenance activities such as (but

not limited to) routine summer and winter maintenance. This cost estimate for

routine maintenance (including summer and winter maintenance) is to be

prepared based on specified service levels and standards and shall inter alia

show estimated values of uniform monthly lump-sum payments for the

maintenance activities; and

• The cost estimate for safeguards compliance (specific aspects but including

implementation of the contracts’ Environmental Management Plans – EMPs) and

contract management, including establishment of a quality-control unit (with

technical staff, laboratory and field testing equipment, vehicles, computers etc.)

to be included as specific line items;

The Consultant will prepare a unit price analysis of each major work item using basic cost elements (labor, materials, equipment, tools, overheads, on-site costs, profit, etc.) It shall show separately the cost of all taxation (direct or indirect). The estimated financial cost resulting from this analysis is to be compared with costs of similar previous projects or similar works executed in the area or sub-region of the country. In order to assist in budgeting for the required construction period, the Consultant is to prepare an envisaged construction schedule for the proposed works, by contract, showing the anticipated annual payments to the contractors. For each road section, the expected duration of the required road rehabilitation works where relevant should be provided. Due account is to be taken of the climatic and any other conditions of the area which may influence the construction schedule. The Cost Estimate for routine maintenance services is to be prepared based on estimated quantities of required works to be carried out during the 5-year period in order to maintain the whole road network included in the contracts to the agreed service levels (as proposed by the Consultant and approved by the RD) and will also include a

54 Appendix 2

provision for expected inflation, based on historical inflation rates for relevant work activities, labor, materials, etc.

Prepare Bidding Documents Suitable for ADB financing (Consultant A-Team Leader/Engineer, Consultant-B/Contract Specialist, Consultant C- Environmental and Social Safeguards Specialist)

The Consultants will prepare the bidding package for tendering, including technical reports, plans, maps, specifications etc. The bidding document will be prepared based on WB standard bidding documents adapted in consultation with the RD and ADB for the proposed PBM contracts. The following table is provided for the Consultants’ information and use as appropriate.

Task Responsible Assistance

Rehabilitation (Detailed Design (DD) supplied by the RDMRDI) ):

1. Detailed design report; DD

Consultant N/A

2. Drawings; DD

Consultant N/A

3. Technical Specifications: DD

Consultant N/A

4. BoQ & MoM; DD

Consultant N/A

Initial Repairs for maintenance only sections: Responsible: Assistance:

1. Condition survey report; Consultant A RDMRDI

Counterpart

2. Initial repair plan & Schedule – (for information only for bidders);

Consultant A N/A

3. Road safety inspection report; RDMRDI

Counterpart N/A

4. Initial repair cost estimate – (for internal use); Consultant A RDMRDI

Counterpart

Periodic maintenance: Responsible: Assistance:

1. Conceptual design report: Consultant A N/A

a. Conceptual design; Consultant A N/A

b. Technical Specifications; Consultant A Consultant B

c. Cost estimate – (for internal use); Consultant A RDMRDI

Counterpart

Routine and Winter maintenance: Responsible: Assistance:

1. Technical specifications for maintenance: Consultant A RDMRDI

Counterpart

a. Basic concepts for OPBRC; Consultant A N/A

b. Description of Services to be provided; Consultant A RDMRDI

Counterpart

c. Specifications of Service Levels and Performance Measures;

Consultant A RDMRDI

Counterpart

d. Methods of Inspection of Service Levels; Consultant A RDMRDI

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Task Responsible Assistance

Counterpart

e. Specifications of Performance Criteria; Consultant A RDMRDI

Counterpart

f. Emergency Works; Consultant A RDMRDI

Counterpart

General commercial documents: Responsible: Assistance:

1. ADB Standard bidding documents, adjusted with RD and ADB agreement to be compatible with the proposed PBM approach

Consultant B/ Consultant A

RDMRDI Counterpart

Safeguards documents: Responsible: Assistance:

1. Land Acquisition and Resettlement Plan DD

Consultant N/A

2. Rehabilitation section - Environmental Impact Assessment or Initial environmental assessment (including Environmental Management Plan)

DD Consultant

N/A

3. Maintenance section – Initial Environmental Assessment, assuming Environmental Category B (including Environmental Management Plan)

Consultant C N/A

The Consultants are to include in the bidding documents and the resulting contracts a mechanism to ensure that the contractors remain motivated to undertake the maintenance works for the duration of the contracts after the rehabilitation works have been completed.

Pre-bid meeting (Consultant A-Team Leader/Engineer and Consultant-B)

The Consultants will participate in the pre-bid meeting for potential bidders, prepare responses to questions raised at the meeting or during the bidding period, and also prepare meeting minutes.

Assistance in bidding process (Consultant A-Team Leader/Engineer and Consultant-B)

The Consultants will assist RD during the bidding period. In particular, if needed, they will prepare any Addenda to the bidding documents, to correct errors and omissions, to accommodate changes, or to provide additional clarifications which may be necessary after bid document issue.

5. COUNTERPART SUPPORT

The RD will assign counterpart staff and a field survey vehicle to support assessment of the proposed road network. Consultant A-Team Leader/Engineer is responsible for defining data forms for the fieldwork and will accompany the team during data collection.

RD will ensure all available data is provided to the consultants including historic data of road works carried out within the project area.

RD will also provide current and historic traffic data counts and if necessary, organize additional counts based on agreement with the consultants).

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6. CONSULTANTS’ QUALIFICATIONS AND EXPERIENCE

The Consultants should have proven competence and experience to undertake the tasks defined by these Terms of Reference to achieve the overall and the specific objectives of the project, in terms of time, costs and quality.

Consultant-A Team Leader/Engineer

General: Degree in civil engineering or equivalent with preferably 10 years general professional experience including international experience. Specific: Preferably 10 years of experience in Output/Performance Based Road Contracts including road rehabilitation and maintenance. Other experience in road maintenance and general Road Asset Management. Fluency in English language is required.

Consultant-B Contract Specialist

General: Graduate degree and preferably 10 years of general professional experience including international experience. Preferably 5 years of professional experience in preparation of Bidding Documents / Development of Contracts according to ADB requirements. Experience in preparation of PBM Contract documents is mandatory. Fluency in the English language is required.

Consultant-C Environmental Specialist

General: Graduate degree in natural science with 10 years’ general professional experience.

Preferably, 5 years of similar experience as an Environmental expert in road maintenance/rehabilitation projects.

Office accommodation

The Client will provide office space and office equipment (except for computers and printers) for the Consultants.

Facilities to be provided by the Consultant

The Consultants are to ensure that they are adequately equipped. Driver and car with the associated costs for missions to the project sites in Georgia during the Assignment is to be included in the Consultants’ financial proposals. Generally, all necessary costs for successful implementation of the assignment shall be included in the Consultants’ financial proposals. The details will be finalized during contract negotiations.

7. REPORTS

Reporting requirements

The Consultant/Team Leader is required to provide the following activity progress reports and deliverables:

Report

Minimal Contents

Deadline (from commencement of

services)

Inception Report 1. Work plan 2. Methodology 3. Data collection plan

Within 1 week

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Report

Minimal Contents

Deadline (from commencement of

services)

Interim Report 1

1. Network assessment report; 2. Tentative Service Levels; 3. Program for initial repairs and

periodic maintenance; 4. Conceptual design for periodic

maintenance; 5. General work program for all

works (total duration of Contract);

Within 2 months

Interim Report 2

1. Cost estimate (CE) of Periodic Maintenance;

2. CE of Initial Repairs; 3. CE of Routine and Winter

Maintenance; 4. CE of Emergency Works; 5. Cashflow model for 5-year

duration of the Contract; 6. EIA for Maintenance section

Within 2.5 months

Draft Bidding Documents 1. Full bidding package in line with

sub-clause 4.5 of TOR; Within 3 months

Final Report/Final Bidding Documents

1. Full bidding package incorporating comments from the RD and ADB

Within 4 months

The Consultant shall also be ready for receipt and incorporation of comments from the RD and ADB on every separate report, as necessary. The Consultant A – acting as a Team Leader, will be ultimately responsible for management of other team members and meeting the deadlines and quality requirements provided in the table above. The Consultants B and C will report to Consultant A and will follow his/her guidance in coordination with the RD. All reports will be written in concise, clear and well-edited Standard English. The printing and translation of each report into Georgian language shall be decided on a case-by-case basis in line with instructions provided by the Client and these shall be reimbursed at cost by the Client through provisional sums allocated for these purposes. Spreadsheets and schedules shall be produced in a maximum of A3 size for reporting purposes and may be printed single-sided. File origins shall be clearly identifiable in a header or footer. A list of essential contact persons is to be included. The reports should have a title page, which should include project name, project code or reference, report title, date issued, and period covered, and the name and address of the Consultant.

Submission & approval of reports

The reports referred to in Section 6.1 above must be submitted to the RD only. The RD will be responsible for formally approving the reports, after taking into accounts comments provided by ADB, and providing comments to the Consultants.

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8. LOCATION AND DURATION OF THE ASSIGNMENT

Location of the assignment is Georgia, Tbilisi. Study area is located to the north of Tbilisi.

Map 8.1 – PBM Area

Total duration of the assignment is 6 months with a tentative start date of August 2019. Consultant-A: Team Leader/Engineer is expected to have a total input of 4 months – full time will be spent on field. Consultant-B: Contract Specialist is expected to have a total input of 2 months which will include 1-month field input during preparation/finalization of the Bidding Documents. Consultant-C: Environmental Specialist (Local) with total input of 1 month. Consultant-A will be responsible for agreeing the exact working and field visit schedule of Consultants B and C in order to ensure uninterrupted provision of services. In addition to the above, Consultants A and B shall take into account necessity of their support during the pre-bid meeting (1 visit with a duration of two business days), and their assistance in preparation of answers to the clarification questions raised by the bidders (home input as necessary). The type of contract for all three consultants shall be: Time-based.

C. FINANCIAL AUDITOR

I. Introduction

1. This terms of reference is prepared in accordance with provisions of the (i) Loan Agreement XXXX-GEO (Loan Agreement) between Georgia and Asian Development Bank (ADB) dated XX XXX XXXX. II. General Background

2. The proposed project will (i) construct a new two-lane bypass road of 14.3 km skirting Batumi; and (ii) contract out routine and periodic maintenance work for about 200 km of international and main secondary roads based on performance-based maintenance (PBM) contract. Batumi is a major port city in the southwest part of Georgia, bordered by the Black Sea to the west and Turkey to the south. The existing main road connecting Sarpi at the border with

Appendix 2 59

Turkey to Poti, a major port at the Black Sea, is a key transit route along the coastline of the Black Sea for heavy goods and passenger traffic from Turkey to Tbilisi and then onto Azerbaijan and the Caspian Sea.. 3. The executing agency will be the Ministry of Regional Development and Infrastructure of Georgia (MRDI), which is responsible for preparing and implementing unified state policy on development, planning, and scientific and technological progress matters of all international and secondary roads network in the country. It is currently the executing agency for the ongoing MFF and has a sound understanding of ADB policies and procedures. The Roads Department (RD), an agency under MRDI, will be the implementing agency. 4. The responsibility for the preparation of financial statements including adequate disclosure is that of the management of the Eurasian Transport Corridor Investment Center of MRDI (ETCIC). This includes the maintenance of adequate accounting records and internal controls, the selection and application of accounting policies, and the safeguarding of the assets of the entity. As part of the audit process, the auditor will request from Management, written confirmation concerning representations made to the auditor in connection with the audit. 5. The auditor must understand the “purpose for which the funds are intended” in the context of the broad project objectives as well as in terms of the specific project budget. III. Employment Authority

6. The audit services will be contracted by the ETCIC, with the following contact details:

Contact Person: _____________________ Designation: _____________________ Address: _____________________ Telephone: _____________________ Facsimile: _____________________ E-mail: _____________________

IV. Objectives

7. The objective of the Audited Project Financial Statements (APFS) audit is to enable the auditor to express an opinion on the financial position of the project implementation for the fiscal years ending 31 December 2017 to 31 December 2022 on the funds received and expenditures made within audit year. V. Audit Scope

8. The auditor’s examination should include evaluation of the systems and operating procedures for accounting, custody of assets, control of environment and internal financial control, financial reporting, and related systems. An analysis of explanations submitted to the auditor and all information necessary to support the auditor’s opinion and to construct the report of the auditor, will be provided by the ETCIC, RD, MRDI, and the Ministry of Finance of Georgia (MOF). 9. The auditor should obtain an understanding of the project and the RD, MRDI, MOF, including the contents of the Report and Recommendation of the President to the Board of

60 Appendix 2

Directors (ADB) (RRP), legal agreements and the ADB’s guidelines, i.e. Financial Management and Analysis of Project, 2005, Loan Disbursement Handbook, Procurement Handbook, etc. 10. Auditing Standards and Program. The audit will be carried out in accordance with the agreed international auditing standards as specified in the Loan Agreement, including professional or general standards, standards of fieldwork, and reporting standards. The audit program will consider the risk of material misstatements resulting from fraud or error. It should include procedures that are designed to provide reasonable assurance that material misstatements (if any) are detected. 11. Accounting Policies and Changes. The auditor should comment on the project’s accounting policies, and confirm the extent to which the agreed project accounting policies have been applied. In particular, the auditor should note the impact on the APFS arising from any material deviations from the agreed accounting standards. The auditor should also comment on any accounting policy changes, either during a financial year, or from one year to another. 12. Advance Account (or Special Account). The Advance Account reflects: (i) deposits and replenishment received from financiers, (ii) payments substantiated by withdrawal applications, and (iii) the remaining balance at financial year-end. The auditor will examine whether the Advance Account has been maintained in accordance with the provisions of the relevant financing agreements. 13. The auditor must form an opinion on whether the Advance Account was used in compliance with required procedures (e.g., those of ADB), and the fairness of the presentation of Advance Account activity and the year-end balance. The auditor should examine the eligibility and correctness of financial transactions during the period under review, account balances at the end of the period, the operation and use of the Advance Account in accordance with the financing agreement, and the adequacy of internal controls for this particular disbursement mechanism. 14. Statements of Expenditures (SOEs). The auditor will audit all SOEs used as the basis for the submission of loan withdrawal applications to ADB. These expenditures should be compared for project eligibility with the relevant financing agreements (and with reference to the RRP and other project documents for guidance when considered necessary). Where ineligible expenditures are identified as having been included in withdrawal applications and reimbursed against, these should be separately noted by the auditor. The annual audit report should include a separate paragraph commenting on the accuracy and propriety of expenditures withdrawn under SOE procedures, and the extent to which ADB can rely on those SOEs as a basis for loan disbursement. Annexed to the APFS should be a schedule listing individual SOE withdrawal applications by specific reference number and amount. 15. Compliance with Financial Covenants. The auditor will confirm compliance with each financial covenant contained in the project legal documents. Where present, the auditor should indicate the extent of any noncompliance by comparing required and actual performance measurements for each financial covenant with the financial year concerned. 16. Use of Funds for the Purpose Intended. The auditor will confirm, or otherwise, that:

• All external funds have been used in accordance with the relevant financing agreements covering each project, with due attention to economy and efficiency, and only for the purpose for which the financing was provided;

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• Counterpart funds, i.e. borrower and/or co-financiers have been provided and used in accordance with the relevant financing arrangements and only for the purpose for which the financing was provided; and

• Goods and services financed have been procured in accordance with the relevant financing agreements.

17. Record Keeping. The auditor will pay particular attention to whether all necessary supporting documents, records, and accounts have been kept in respect of all project activities, with clear linkages between the accounting records and the APFS. This will include: (i) computation and recalculation, including checking the mathematical accuracy of estimates, accounts, or records; (ii) reconciliation, including reconciling related accounts to each other, subsidiary records to primary records and internal records to external documents; and (iii) tracing, including tracing journal postings, subsidiary ledger balances, and other details to corresponding general ledger accounts or trial balances. 18. Internal Control Systems. The auditor will assess the adequacy of the project financial management systems, including internal controls, including whether: (i) proper authorizations are obtained and documented before transactions are entered into; (ii) accuracy and consistency are achieved in recording, classifying, summarizing, and reporting transactions. VI. Team Composition and Qualification Requirements for the Key Experts

1. Independence

19. The auditor will be impartial and independent from any aspects of management or financial interest in the entity under audit. In particular, the auditor should be independent of the control of the entity. The auditor should not, during the period covered by the audit, be employed by, or serve as director for, or have any financial or close business relationship with the entity. The auditor should not have any close personal relationships with any senior participant in the management of the entity. The auditor must disclose any issues or relationships that might compromise their independence. 2. Auditor and Audit Staff Competence

20. The auditor must be authorized for practice in Georgia and be capable of applying the agreed auditing standards. The auditor should have adequate staff, with appropriate professional qualifications and suitable experience, including experience in auditing the accounts of entities comparable in nature, size, and complexity with the entity whose audit they are to undertake. 21. To this end, the auditor is required to provide curriculum vitae (CV) of the auditors who will provide the opinions and reports, together with the CVs of managers, supervisors, and key personnel likely to be involved in the audit work. These CVs should include details of audits carried out by these staff, including ongoing assignments. 22. The selection of the auditor will follow ADB Guidelines on the Use of Consultants (2015, as amended from time to time) using the Least-Cost Selection method, with the submission of a Biodata Technical Proposal. The services of the auditor will be carried out by a national firm for XX months.

62 Appendix 2

23. Qualification Requirements. The Consultant is free to commit resources to suit the working plan. However, the professional staff inputs for key experts are estimated as follows: Team Leader/Senior Audit Manager (National – 5 Person-Months)

• A bachelor degree in accounting, finance, or related field. A master degree will be an advantage.

• Preferably 12 years of work experience including auditing standards analyses, annual project accounting, accounting policies, internal control systems, record keeping methodology.

• Experience working as a Team Leader in the field of auditing.

• Experience working in Georgia or in the Central Asia region and working with international organization/international agency.

Tax Manager/Assistant Audit Manager (National – 5 Person-Months)

• A bachelor degree in accounting, finance, or related field. A master degree will be an advantage.

• Preferably 10 years of work experience including auditing standards analyses, annual project accounting, accounting policies, internal control systems, record keeping methodology.

• Experience working in Georgia or in the Central Asia region and working with international organization/international agency.

Auditor 1, 2 (National – 5 Person-Months)

• A bachelor degree in accounting, finance, or related field.

• Preferably 8 years of work experience including auditing standards analyses, annual project accounting, accounting policies, internal control systems, record keeping methodology.

• Experience working in Georgia or in the Central Asia region and working with international organization/international agency.

VII. Submission of Proposal and Work Plan

24. You are invited to submit a proposal and a work plan to provide the audit services described in this letter. Proposals should address, among other things:

(i) The extent (if any) that you would not conform to the agreed auditing standards and indicate any alternative standards to which you may (be required to) conform.

(ii) Whether the audit would be conducted as a completed audit (i.e., will the auditors carry out their audit after financial year-end, when the books of account are, or are being, closed).

(iii) Whether an audit carried out after financial year-end would be supplemented by one or more interim audits during a financial year. The principal purpose is to test ongoing systems and internal controls, and to relieve pressure on the staff of the entity and on the auditor at year-end.

(iv) The manner in which the auditor proposes to address any statutory requirements relating to audit (e.g., certifications relating to shareholders’ equity required under the companies’ act) or to which they may be implicitly bound by contractual obligations of the employer (e.g., ADB auditing requirements, Statements of Expenditure, Advance Accounts).

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(v) Procedural requirements for certain verification procedures (e.g., checking of stocks, inventories, assets, etc.).

(vi) Specific actions required on the part of the employer (e.g., access to computer systems and records, disclosures).

(vii) Discussions before signing the opinion and report on any matters arising from the audit, and with whom these discussions would be held.

(viii) The timetable for provision of opinions and reports.

VIII. Delivery of Opinions and Reports

25. The auditor will provide the audit opinions on the APFS and management letters to management (with copies to ADB), in accordance with the following timeframes:

Reports FY2017 FY2018 FY2019 FY2020 FY2021 FY2022

Draft Final Report

not later than 1 June 2018

not later than 1 June 2019

not later than 1 June 2020

not later than 1 May 2021

TBD TBD

Final Report

not later than 15 June 2018

not later than 15 June 2019

not later than 15 June 2020

not later than 15 May 2021

TBD TBD

26. All reports must be provided in three copies in the English and Georgian languages. IX. Description of Materials and Timing of Delivery

27. The annual project accounts and supporting documentation will be provided to the auditor within 5 days after the issuance of “Notice of Contract Effectiveness” for 2017 accounts and every 31 March for the succeeding accounts. X. Audited Project Financial Statements (APFS)

28. The APFS comprise: (i) Statement of Accounting/Financial Policies (ii) Statement of Cash Flows/Cash Receipts and Payments (iii) Statement of Uses of Funds by Project Activity (iv) Notes to the Financial Statements

XI. Management Letters

29. On conclusion of the audit, the auditor will prepare a management letter for the audited project, detailing:

(i) Any material weaknesses in the accounting and internal control systems that were identified during the audit, including those regarding SOEs and Advance Accounts;

(ii) Recommendations to rectify identified weaknesses; (iii) Status of significant matters raised in previous management letters; (iv) Practical recommendations on the steps that could be taken to become

materially compliant with the agreed project accounting policies, together with a time frame for making these changes;

64 Appendix 2

(v) The degree of compliance with each of the financial covenants in the Loan Agreement and recommendations for improvement;

(vi) Matters that have come to the auditor’s attention during the course of the audit which have a significant impact on project implementation;

(vii) Any other matters that the auditor considers should be brought to the attention of the project’s management; and

(viii) Significant matters that the auditor considers should be brought to ADB’s attention.

XII. Client’s Input and Counterpart Personnel

30. The Client will provide (i) furnished airconditioned office room in ETCIC/RD office; (ii) relevant project data and reports upon request; and (iii) assist the auditors on coordination for meeting. XIII. Statement of Access

31. The auditor will have full and complete access, at all reasonable times, to all records and documents including books of account, legal agreements, bank records, invoices, and any other information associated with the project and deemed necessary by the auditor. 32. The auditor will be provided with full cooperation by all employees of ETCIC, RD, MRDI, and MOF, whose activities involve, or may be reflected in, the annual financial statements. The auditor will be assured to have rights of access to banks and depositories, consultants, contractors, and other persons or firms hired by the employer. XIV. Agreed Project Accounting Policies

33. “Agreed project accounting policies” with regards to preparation of Annual Project Financial Statements, means the cash-based International Public Sector Accounting Standard (IPSAS) promulgated by the International Federation of Accountants (IFAC). XV. Agreed Auditing Standards

34. “Agreed auditing standards” means the International Standards on Auditing (ISA) promulgated by the International Auditing and Assurance Standards Board (IAASB).

XVI. Public Disclosure

35. Following Article IV Section 4.05 (b) of Loan XXXX-GEO Agreement dated XX XXX XXXX, ADB shall disclose the annual audited financial statements for the project and the opinion of the auditors on the financial statements within 14 calendar days of the date of ADB’s confirmation of their acceptability by posting them on ADB’s website. The Audit Management Letter will not be disclosed.

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D. SUPERVISION OF THE CONSTRUCTION OF POTI BRIDGE AND ACCESS ROADS

I. BACKGROUND 1. Georgia has received financing from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) towards the cost of the Batumi Bypass Project and subject to further ADB approval intends to apply part of the proceeds of the ADB part of this financing to Consulting Services for Supervision of the Construction of the Poti Bridge and Access Roads. 2. The Executing Agency for the project is the Ministry of Regional Development and Infrastructure (MRDI) and the Implementing Agency is MRDI’s Roads Department of Georgia (RD). RD will be the Employer for the civil works contracts and the Client for the consultancy services. 3. These Terms of Reference (TOR) will be used by the RD in selection of the Construction Supervision Consultant (CSC), in accordance with the procedures set out in Guidelines on The Use of Consultants by the Asian Development Bank and Its Borrowers 14F15F

16. The selection method used will be Quality and Cost Based Selection (QCBS), with a quality: cost ratio of 90:10. The resulting contract will be time-based. 4. The Civil Works contract for construction of Poti Bridge will be procured using FIDIC MDB Harmonized 2010 edition of Conditions of Contract for Construction for Building and Engineering works designed by the Employer – i.e. the “Pink Book”. 5. The Batumi Bypass Road Project: Georgia is located south of the Caucasus mountain range, with Russia to the north, Armenia and Turkey to the south, Azerbaijan to the east, and the Black Sea to the west. It has a population of 4.5 million. Georgia, due to its geographic location, provides the shortest transit link between Central Asia and Europe. Hence, transport plays a pivotal role in supporting the national economy, and development of the transport sector is vital to increasing economy of the region through reduced transport costs and increased transit revenues. 6. Poti Bridge and Access Roads: The project section represents a part of the E-60 transit corridor and TEN-T Core Network. The main target of the construction is to improve logistics of the Poti Sea Port and its proper connectivity with East-West Corridor. In the future, this section will also be a part of the Black Sea Ring Road. 7. This part of the core network is used for transit as well as local traffic purposes. Construction of a new Poti Bridge will give Poti and Batumi Ports the opportunity to improve their capacity towards the direction of Caspian Sea ports and become more attractive and competitive as transit corridors. 8. This project envisages significant improvement in road users’ safety, reduced travel time through improved operating speed and increased capacity, increase in Transit potential of E-60 and E-70 corridors and TEN-T Core Network, increased Black Sea ports cargo flow capacity between Europe and Middle Asia and increased touristic and agriculture potential of the region.

16 https://www.adb.org/sites/default/files/institutional-document/31481/guidelines-use-consultants.pdf

66 Appendix 2

9. Poti City is located in the Black Seaside and the population is circa 50,000. In addition, Poti Port is located in the city. Poti Port is a Junction of E-60 and E-70 transport corridors. Around Poti there is marshy area therefore, based on this reason, accessibility to the Poti City is limited. E-60 and E-70 transit corridor goes through Poti City’s populated area and is used as access road of the City and Port from the northern and southern sides. From the northern side of the Poti City, E-60 transit corridor is crossing the River Rioni on an existing barrage. This was built in 1959 and at the moment is in a very poor condition. Except for this road, Poti City and Poti Sea Port have only one access road from the southern part. 10. In case of damaging the barrage and closing of the road, all traffic will be diverted to the south direction that will create a bottleneck and will have a negative effect on the transit movement. Additionally, drivers and passengers who travel from Samegrelo Region to the Poti or Batumi will be forced to go through Samtredia and thus, travel additional 120 km. Moreover, while travelling from East Georgia, many trucks are using the North direction to access Poti Port as the shortest link. 11. Furthermore, the truck traffic on the existing barrage is not safe during the bi-directional

movement since the width of carriageway is only 6.2 meters.

The Roads Department has developed the Detailed Design of Grigoleti - Poti Road Section of which Poti Bridge represents one of the sub-sections.

II. SCOPE OF SERVICES AND REQUIRED OUTPUTS

12. The consulting services will comprise the following tasks and associated deliverables:

Task 1 Construction Supervision Task 2 Environmental Support and Monitoring Task 3 Resettlement Monitoring and Social Development Task 4 Sturgeon Study

TASK 1 Construction Supervision 13. The CSC will supervise the civil works contractor. The tasks will include, but not be limited to the following:

(i) Administering the civil works contract as the Engineer, and undertaking the duties of the Engineer, as defined in the civil works contract;

(ii) Validating the compliance of the Contractor’s bank securities’ and insurance policies with the Contract and monitoring their validity, ensuring that those remain valid and enforceable throughout the duration of the Contract;

(iii) based on contract designs, identify all public utilities that are to be relocated and provide the Employer with schedules of these for its interaction with the relevant utility agencies to arrange for the affected utilities’ relocation from the project-affected area of the right-of-way; together with the RD, the contractors, and public utility agencies, identify all utility services within the project’s corridor of impact that are to be protected and marked to avoid damage, or relocated, as required by the works;

(iv) prior to the commencement of construction and again 3 months prior to the completion of the works, carry out a road safety audit of the project road, and as necessary instruct the contractor to amend completed works or undertake additional works to comply with the findings of the audit;

Appendix 2 67

(v) ensuring that the contractor’s topographical surveys to be used, working drawings, as-built drawings and measurement purposes comply with the requirements of the specifications;

(vi) checking and approving the contractor’s method statements, working drawings, and programs for both temporary and permanent structures;

(vii) developing a comprehensive system of inspection checking and recording to ensure compliance of all works with contract requirements;

(viii) developing measurement and payment systems; establishing a monitoring system for costs to date, and costs to completion15F16F

17; providing a system for the preparation of interim and final payment certificates; providing advice on the evaluation of claims and extensions of time; providing advice on the preparation of variation orders, and for monitoring variation orders; establishing a claims monitoring, evaluation and reporting system; and assisting and advising the Employer on all matters pertaining to the contracts and to disputes;

(ix) providing day-to-day supervision and inspection of works on site; maintaining by the supervision staff of a site diary covering all contractor’s activities, and recording site conditions;

(x) prior to commencement of works, approving the contractor’s method statements and working drawings including occupational health and safety plans, traffic management and traffic control arrangements, proposed public and private haul and access routes, together with the contractor’s arrangements for maintenance and reinstatement of the same, borrow locations, working areas, materials stockpile areas, materials preparation, and processing areas, etc.;

(xi) reviewing, commenting upon, and accepting the contractor’s quality assurance plans and procedures; assisting the contractors with establishing on-site and laboratory-based quality control, testing, and reporting procedures for all construction, workmanship, and materials; supervising the contractors in implementation of their approved quality assurance plans;

(xii) prior to the commencement of construction, approving the contractor’s Construction, Environment, Health and Safety, and Labor Management Plans, and during construction ensure that the contractors comply with the requirements of these plans;

(xiii) commenting on and ultimately approving the contractor’s Specific Environmental Management Plans (SEMPs) and Summary Social Action Plans, and, thereafter, monitoring and reporting compliance with these plans;

(xiv) monitoring the contractor’s programs and costs to completion and providing advice to the Employer on procedures necessary to complete the works within the time and cost stated in the works contracts;

(xv) preparing reports and providing assistance, as necessary and as required, to the Disputes Board if appointed and during any subsequent arbitration procedures;

(xvi) conducting monthly Contract Site Meetings to be attended by representatives of the Employer and the contractors, and preparing the minutes of such meetings and circulating them among the participants; attending and making presentations at progress coordination meetings and similar progress reviews, as well as attending all review meetings as required by the Employer either on project site or in Tbilisi office of the Roads Department of Georgia;

(xvii) providing the Employer with complete records and assisting the contractors with providing “As Built” drawings for the contracts; certifying completion and taking over of part or all of the works; and

17 Consultant is to establish Earned Value Analysis, Variance Analysis and Trend analysis systems in line with

PMBOK® Guide Sixth Edition.

68 Appendix 2

(xviii) preparing Final Payment Certificates, Taking Over Certificates, and Performance Certificates, to the timing of, and as required by, the contracts, and advising the Employer on the release of all contractor’s securities and retentions.

(xix) Calculating applicable price adjustment including reviewing Contractor’s proposal/submission and double-checking with the sources of indexes and relevant indexes prices from the source organizations. In addition, the Consultant shall be responsible for carrying out all actions related to price adjustment as stated in the FIDIC GCC;

(xx) Reviewing and evaluating Contractor’s proposals of Value Engineering and any Variation Orders, from technical and financial, as well as contract management perspectives, including review and approval/commenting on the proposed designs (if and when applicable) and if acceptable, certifying such designs “for construction”;

(xxi) Implementing any other duties not specified in the above list, as required by the Client.

TASK 2 Environmental Support and Monitoring 14. The CSC will ensure the implementation of the Project’s Environmental Management Plan (EMP), which is part of the civil works contract and also part of the Project’s Environmental Impact Assessment (EIA), and all related documents. The specific tasks will include the following:

Prior to commencement of the works: (i) organize a workshop for RD staff on how the environmental aspects of the project

will be monitored, with special emphasis on biodiversity issues, especially how the Consultant plans to ensure “no net loss” or if required “net gain” of natural habitats and to support notable species of conservation importance. Giving emphasis on SEMP evaluation; compliance monitoring of construction activities and preparation of corresponding reports; supervision responsibilities and interaction with contractor and resolution and reporting of non-compliance issues and complaints;

(ii) design and implement an ambient environmental monitoring program for air quality, water quality, biodiversity, vibration and noise, and ensure that the pre-construction baseline monitoring program has been implemented and the report is finalized prior to commencement of construction;

(iii) provide guidance to the RD’s environment specialist on the environmental and social aspects of the project with emphasis on compliance monitoring and reporting;

(iv) assist the RD with establishing and operating the grievance redress mechanism, including creating a grievance chart (format to be agreed with the RD) which is to be updated on a weekly basis;

(v) evaluate the environmental aspects of the contractor’s method statements and working drawings and recommend corrective actions as needed, if any, to ensure compliance with the project’s environmental and social requirements;

(vi) review the contractor’s SEMPs and all topic specific (such as waste) and site specific (such as construction camp) specific EMPs; recommend modifications to these documents to be compliant with: (a) the environmental and social requirements of the construction contracts as reflected in the EMPs, and (b) the conditions of environmental approvals of the Government, if required.;

(vii) develop the compliance monitoring system to be used during the construction period for monitoring the contractor’s performance relative to environmental requirements,

Appendix 2 69

including the preparation of: (a) monitoring and corrective action forms and checklists, (b) inspection procedures, and (c) documentation procedures;

(viii) conduct orientation sessions with the contractors on the compliance monitoring system to be used, notification of non-compliance, and the process of requiring contractors to implement corrective measures when necessary; and

(ix) provide guidance to the contractor on how its SEMP will be implemented including the: (a) requirements for each mitigation measure, and (b) implementation schedule of each mitigation measure taking into consideration the general requirement that no specific construction activity will be approved to be commenced if the associated mitigation measures for such activity are not ready before work commences.

During implementation of the works: (i) supervise the implementation of the SEMPs, the Project EMP and other relevant

topic and site specific EMPs; (ii) undertake all ambient environmental monitoring (including but not limited to water

quality, air quality, and noise levels), by independent third party environmental monitoring contractors as appropriate;

(iii) evaluate the contractor’s submitted works activities and schedules relative to the requirements of the approved SEMPs;

(iv) implement the Biodiversity Action Plan (BAP) as developed as Annex 1 of the Project EIA. This will be done by commissioning various surveys and monitoring activities by specialists for implementation of the BAP financed under the Contract.

(v) undertake monthly inspection, monitoring and reporting of construction sites and all construction-related facilities (workers' camps, asphalt batching plants, concrete batching plants, borrow pits, disposal sites for tunnel and other spoil and unsuitable materials, equipment maintenance areas, fuel and materials storage sites, project-specific quarries and crushers, etc.) to assess the contractor’s compliance with the SEMPs and the Project EMP.

(vi) require the contractors to update their respective SEMPs when necessary; (vii) monitor the contractor’s compliance with health and safety, and labor requirements

of the project as stipulated in the contract documents and their approved health and safety, and labor plans (including the outcome of labour audits), and require the contractors to provide updated plans when necessary;

(viii) record non-conformance cases, inform contractors of improvements needed, respond to contractor’s proposals, prepare corrective action plans for contractors, and monitor their implementation;

(ix) assess and approve use of temporary construction areas identified during construction such as camps, laydown areas, access roads, etc;

(x) include environmental and social monitoring in monthly monitoring reports for submission to the RD; and

(xi) draft semi-annual environmental safeguard monitoring reports, as required by ADB;

Upon completion of the works: (i) prepare a report on the project's environmental and social compliance performance,

including lessons learned that may help MRDI and the RD in their environmental monitoring of future projects. The report will be an input to the overall project completion report.

70 Appendix 2

15. The CSC’s International Environment Specialist (IES) will undertake the initial monthly monitoring, working with the National Environmental Specialist (NES). Subsequent monthly monitoring will be carried out by the NES. The IES will undertake semi-annual monitoring and report preparation working with the NES. The required semi-annual environmental report, in a format to be agreed with ADB will be based on the results of monthly monitoring. The IES, with assistance from the NES, will design and conduct an environmental management capacity building and training program for MRDI and RD staff.

TASK 3 Resettlement Monitoring and Social Development 16. The CSC’s social management tasks will cover:

(i) Communications and Participation Planning and Implementation (ii) Road Safety Awareness Campaigns (iii) Gender and Equal Opportunity

17. Involuntary Resettlement Management. The CSC will support the RD with:

(i) providing the RD with detailed schedules and allocation of responsibilities for demolition or relocation of structures, compensation, and assistance to affected households, and monitoring their implementation to ensure that the notice to proceed to contractors for any given sub-section cannot proceed until the RD confirms in writing that payment has been fully disbursed to the displaced and/or affected people, and rehabilitation measures are in place, already compensated or assisted displaced people have cleared the area, and the area is free of any encumbrances;

(ii) preparing updates and supplementary resettlement plans in accordance with the Government and ADB requirements to cover any changes in the scope of works covered by the resettlement plans;

(iii) monitoring of implementation of resettlement plans and income restoration activities, and reporting on a quarterly basis;

(iv) recommending corrective actions on non-compliance issues, and reporting on their implementation;

(v) coordinating the works of the Independent External Monitor, which the Client will contract to carry out a 100% monitoring of affected people, including preparing Semi-Annual Monitoring Reports and Compliance Reports; and

(vi) supporting the Client and relevant Government agencies to establish an effective grievance redress mechanism.

TASK 4 Sturgeon Study 18. The Rioni River and the adjacent Black Sea are breeding areas for several species of critically endangered sturgeon. Since the proposed Poti Bridge will require major works in the Rioni River, particularly for foundations, the RD and ADB have agreed that the project scope will include a comprehensive 2-year study of sturgeon in the river, particularly downstream of the existing barrage and in the vicinity of the new bridge. 19. This study will be undertaken by experienced international and national specialists, selected by the RD in consultation with ADB and engaged as subconsultants under the CSC contract. A provisional sum for this purpose will be included in the CSC contract.

Appendix 2 71

20. For the information of consultants preparing proposals for the CSC services, and for the consultant selected to provide these services, the TOR for the study are provided as Annex 1 hereto. 21. The CSC will be required to provide reasonable office, logistical and other support to the study subconsultant as required. CSC Personnel 22. The indicative staffing requirements for the CSC services are presented in Tables 1 and 2 below, based on an assumed project duration of 24 months. These tables do not include personnel for the Sturgeon Study referred to above, which will be the responsibility of the subconsultant appointed to carry out this study Consultant’s attention is drawn to specific provisions related to replacement of key staff as set out in Annex 2. Qualifications and Term of Reference for each of the key staff are provided in Annex 3.

Table 1: International Personnel Ref. Position PM DNP

FK 1 Team Leader/Bridge Engineer 24 1

FK 2 Senior Geotechnical Engineer 8 0

FK 3 Senior Environmental/Biodiversity Specialist 8 0

Total 40 1

Table 2: National Personnel

Ref Position PM DNP

Key staff

LK 1 Deputy Team Leader / Road Engineer 24 2

LK 2 Bridge Engineer 24 2

LK 3 Geotechnical Engineer 12 0

LK 4 Quantity Survey Engineer 24 0

LK 5 Quality Assurance / Materials Engineer 24 0

LK 6 Environment Specialist 24 2

LK 7 Resettlement Specialist 6 0

LK 8 Occupational Health and Safety Specialist 24 0

LK 9 Road Safety Engineer 2 0

LK 10 Hydrologist 2 0

Total – key staff 166 6 DNP = defects notification period.

23. The Team Leader, who should be full time staff of the consultant, will be the Engineer’s Representative and will be responsible for coordinating the inputs and the activities of the key and non-key staff. Among others, this person will be responsible and authorized to:

• Prepare and certify variation orders, subject to the Employer’s approval as required;

• Prepare and certify Interim and Final Payment Certificates;

• Approve the contractor’s subcontracting, in consultation with the Employer as required

• Representing the CSC as “the Engineer” in accordance with the FIDIC Pink Book GCC.

72 Appendix 2

24. The abovementioned list is the Client’s estimate of the minimum key staff input required for the assignment. If the Consultant considers that additional involvement of the key staff is required, it is free to include such input in its proposal. If no additional input will be included in the proposal, it will be deemed that the Consultant is satisfied with the minimum input for key staff provided above and takes full responsibility to fulfil all obligations as set out in the Terms of Reference with the indicated inputs. 25. Apart from the Key Staff listed above, the Consultant is fully responsible to determine and provide (in its proposal) any and all additional experts (as Non-key staff) that might be necessary for proper implementation of the duties prescribed by the current ToR. This does not refer to the Sturgeon Study 26. Such experts, among others, might include but not be limited to site engineers, laboratory technicians, CAD Specialist, drivers, translators etc. 27. Curricula vitae must be provided with consultants’ proposals for all key positions. Proposal evaluation will be based on all international positions (Table 1), and for national personnel nominated for key national positions (Tables 2) identified above as key staff. The remaining national staff will be discussed and agreed with the selected consultant during contract negotiations or during implementation, and replacements may be requested at that time. Administrative and clerical support personnel are to be provided as required, and the cost of these is to be clearly included in the consultants’ cost proposals. 28. The civil works contract will include provision for provision and operation of the CSC’s site office, office equipment, laboratories with technicians, equipment and other support services, survey technical support with survey equipment, and other support as required. The cost for (i) providing and maintaining vehicles for the CSC’s use; and (ii) accommodation and support for its personnel in Tbilisi and on site are to be included in the consultants’ financial proposals. See Sections V and VII below for relevant information. Reporting Requirements

29. Table 3 sets out the CSC reporting requirements. All reports will be submitted in English in hard copy to the RD and ADB (5 copies and 2 copies respectively) and in electronic form as PDF files through an appropriate large file transfer application. The English reports will also be supported by Georgian translation. The RD and ADB will agree on suitable formats for the progress reports prior to the submission of the first report.

Table 3: Reporting Requirements Report Content Submission date

Inception Report Report will contain a detailed work program, a brief description of the updated work methods proposed for carrying out the services in accordance with the Terms of Reference. The report will also identify any major issues and problems likely to be encountered.

4 weeks after effective date

Monthly Reports Monthly Report to summarize the progress of the project and of civil works contract, the work accomplished, any problems encountered during the month, environmental and resettlement status, a work plan for the next month,

Within 7 days after the end of each month

Appendix 2 73

Report Content Submission date

and minutes of site meetings. The report will present progress information in graphical form, relative to the contractor’s approved contract schedules.

Annual Reports Annual reports to present the overall status of all aspects of the project, including progress achieved by project outputs measured against the targets of the design and monitoring framework, updated procurement plan, compliance with loan covenants, etc.

Within 2 months after the end of the contract year to which the report refers

Environmental Monitoring Reports

Environmental monitoring report to include status of compliance with the project EMPs and BAP, records of related activities, status of grievance redress mechanism, issues and solutions, and results of environmental baselines and monitoring.

Within 15 days after the end of each 6-month reporting period

Social and Resettlement Monitoring Reports

Social and resettlement monitoring report to include status of compliance with resettlement plans, records of social and resettlement activities, status of grievance redress mechanism, and issues and solutions.

Within 15 days after the end of each 6-month reporting period

Road Safety Audit Reports

Detailed findings and recommendations of the road safety audits

Within 90 days of commencement of construction (in-construction audit) Not later than 3 months prior to completion of the civil works contracts (pre-opening audit)

Safeguards Completion Reports

Final status of compliance, summary records of activities, grievance redress mechanism and monitoring results with reference to baselines.

Not later than 3 months after the completion of all civil works (for environmental reports), not later than 3 months after the completion of all resettlement activities (for resettlement reports).

Draft Completion Report

The report will be based on the standard ADB format for project completion reports and will provide additional information relevant to the overall project implementation.

Not later than 3 months prior to completion of the civil works contract.

Final Project Report

This report will update the draft report with contract completion information, and will reflect comments provided on the draft completion report

Not later than 3 months after completion of the civil works contract.

Location of Services 30. It is anticipated that for the duration of the project the locations for the CSC establishment will be at the project site in Poti:

74 Appendix 2

Schedule 31. The civil works implementation period will be 24 months from the commencement date of the Contract. The Defects notification period will be 24 months. Support, Counterpart Personnel and Information A. Services and facilities to be made available to the CSC 32. The following facilities will be provided through the civil works contract at no cost to the CSC:

• Field offices for the CSC field team. The offices will be fully furnished, maintained and serviced, including all office equipment, computers, software and printers, all consumables, and security; and

• Materials testing laboratories, fully equipped, serviced and maintained, including equipment for field and laboratory testings, computers, software and printers and all consumables, and with appropriate technical personnel.

33. Except of the items stated above, all other costs (necessary for implementation of the services) are to be provided for in the Consultant’s Financial Proposal (i.e. vehicles for supervision services, any office/residential accommodation except for site office, etc.) B. Counterpart personnel to be assigned by MRDI and RD to the CSC 34. The Client may provide counterpart staff to work with the CSC. The counterpart staff are to be trained by the CSC to gain hands-on experience in all aspects of contract supervision. The counterpart staff will not work as members of the CSC team for delivering the services and they will be paid salaries by the Government. The cost of these counterpart staff will not be included in the Consultant’s proposal and subsequent contract agreement. C. Reports and Information

35. The RD will provide all relevant existing reports and available documents to the CSC during the implementation of the services. The RD will assist with facilitating access of the CSC to other government agencies for communications, collecting of relevant information, data, documents, etc. and other activities related to the services.

Appendix 2 75

Annex 1 – Terms of Reference for the Sturgeon Study Study of the Sturgeon in Rioni River and in the sea area of its tributary

I. Introduction

This Terms of Reference (TOR) has been developed for a bridge over the Rioni River and access roads (hereafter “the Project”).

The Project is likely to be financed by the Asian Development Bank (ADB) and has been identified as an Environment Category A project owing to the potential for significant irreversible adverse impacts on the Rioni River – one of the few remaining spawning rivers globally for several Critically Endangered fish species, namely Sturgeon. As a result, a Biodiversity Action Plan (BAP) has been developed to demonstrate Project compliance with ADB biodiversity safeguards (ADB 2009). There is extremely little recent information on the status, distribution and ecology of biodiversity in the Project area, so this study is required as part of the Projects requirements listed in the BAP for No Net Loss / Net Gain to be in compliance with ADB Safeguard Policy.

The study’s main aim will be to help for the first time establish species population numbers, exact locations of spawning grounds and annual species movements for Sturgeon Species in the Rioni River. This information will then be used to more accurately direct conservation activities and to inform government policy on future protection of the species.

Due to budgetary and time constraints, the study will be employed for two whole years, with one year commencing on the commencement date of the civil works contract and the second after the Project is completed, during the first year of the contract’s defect notification period.

II. Background

Historically, all six species of the Sturgeon’s Family spread in Georgia spawned roe in the River

Rioni. No bastard sturgeon (A. nudiventris) European sea sturgeon (A. Sturio) was registered in

recent years – they may be very rare or even extinct by now. However, if considering quite

scarce possibilities of scientific monitoring of the Sturgeons family in Georgia, these species are

still admissible to spawn in the River Rioni. As for Hausen (H. huso), Russian sturgeon (A.

gueldenstaedtii), Starry Sturgeon (A. stellatus) and Colchic strurgeon(A. colchicus), these

species still spawn in the River Rioni. There is no updated information about their present state

or status and it is absolutely urgent to gather relevant data to identify the population status and

dynamics of each species in the Rioni River. Since its extinction in the rivers of Turkey, Russia

and recently, in Georgia (Rivers Enguri and Tskhenistskali), Colchic strurgeon (A. persicus

colchicus) has been endemic for the Rioni River and it cannot be seen elsewhere in the world.

Virtually, the rivers Rioni and Danube are the last active rivers in the Black Sea for the Sturgeon

Family for spawning. However, the populations of the Sturgeon Family are decreasing rapidly in

the Danube. The studies accomplished in 2006-2008 (Guchmanidze, 2009) demonstrated that

the river Rioni still contains quite many individuals of the Sturgeon Family.

76 Appendix 2

III. Study of the Sturgeon Family

Key Components: The study must cover the following 6 main components:

1. Assessment of the spawning grounds; 2. Assessment of anadromous migration; 3. Assessment of hatchlings and young growths; 4. Assessment of the food base of hatchlings and young growths; 5. Study of accompanying parameters; and 6. Third Party Monitoring of Construction Activities.

Methodology and Team Composition – Overview: The Study Consultant in consultation with and for approval by the Engineer and the Employer will be responsible for developing an appropriate methodology based on the requirements set out in this TOR. The following components are considered as key requirements:

• The study must follow a scientifically rigorous and repeatable methods to ensure that

future surveys can accurately identify population trends;

• The study should be implemented by a team made up of both International and local

specialists to ensure the methodology follows best international practice and follows

scientific rigor;

• The study output reports will be provided once for each year and will published via an

appropriate forum to allow the data to be publicly available and to be used in wider

conservation efforts;

• It is recommended that the Study Consultant employs directly or completes the study in

collaboration with a University to improve local capacity in the long-term and to train

individuals capable of implementing future monitoring following Project completion; and

• For the third party monitoring of Project implementation, this will be directed by

requirements set out in the project’s Biodiversity Monitoring Plan and will focus on

ensuring that the civil works Contractor is working as per requirements set in the EIA,

EMP and Contract documents.

Assessment of the spawning grounds of the Sturgeon Family: The following elements are considered as key requirements:

• The Study Consultant must conduct the study for each of the two full study years in the

months of May and June; and

• The Study Consultant must cover the identification of the boundaries of spawning

grounds, spawning clusters and their areas, mapping of the identified data, analysis of

the comparison with historical data and identification of changing trends.

Assessment of anadromous migration of the Sturgeon Family:

• The Study Consultant must conduct the study for each of the two full study years in the

months of May and June;

• The Study Consultant must include scanning of the section with the length of at least 10

km in the lower reaches of the river, for at least 10 days with a portable side-scan sonar

Appendix 2 77

with ultra-high resolution, within the frequency range of 400-1600 kHz, with a double-

frequency transducer to identify the producers visiting the Rioni River for spawning; and

• Should overall study costs make this technology make this technology prohibitively

expensive, an alternative method should be selected. Tracking individuals using

electronic tags is one option that could improve knowledge of fish movement and also

feeding activities in the Black Sea.

Assessment of hatchlings and young growths:

• The Study Consultant must conduct the study for each of the two full study years, 7

times a year, in particular: in March, April, May, June, July, August and September, at

the stations given below:

# Coordinates

1. 42.158565° / 42.406419°

2. 42.160516° / 42.409383°

3. 42.159762° / 42.402066°

4. 42.154552° / 42.384209°

5. 42.148496° / 42.365105°

6. 42.140269° / 42.364699°

7. 42.140762° / 42.343823°

8. 42.119027° / 42.331625°

9. 42.124291° / 42.299600°

10. 42.104635° / 42.279609°

11. 42.171691° / 42.083143°

12. 42.190115° / 41.887236°

13. 42.211623° / 41.795836°

14. 42.175653° / 41.750705°

15. 42.185864° / 41.708643°

16. 42.185293° / 41.705252°

17. 42.187686° / 41.704736°

18. 42.198475° / 41.662510°

19. 42.200217° / 41.653201°

20. 42.197384° / 41.651499°

21. 42.209152° / 41.631803°

22. 42.185964° / 41.638417°

23. 42.216711° / 41.623401°

24. 42.204451° / 41.621121°

25. 42.186528° / 41.626928°

26. 42.179648° / 41.631411°

27. 42.167762° / 41.694588°

28. 42.134130° / 41.664049°

29. 42.129164°/ 41.659585°

• The locations of the above-listed stations can be corrected within the range of 50 m without any deterioration of the values of the survey stations. The given points cover the sea area of the river Rioni hydrological unit, oxbow lake and avandelta;

• The study must be accomplished with drift and/or casting nets along the traverse drafted in advance, with several tens of trials of catching the fish along the distance from 500 to 1000 m;

78 Appendix 2

• The study must identify the generic composition of the hatchlings and young growths of the Sturgeon Family and their abundance at each station; and

• In addition, in general, the rolling aspects of hatchlings and young growths must be identified. Instead of the above-listed nets and equipment, the Study Consultant can propose alternate equipment with approval from the Engineer, the Employer and ADB.

Assessment of the food base of hatchlings and young growths:

• The Study Consultant must conduct the study for each of the two full study years,

7 times a year, in particular: in March, April, May, June, July, August and

September;

• The samples of zoo-plankton at all 29 points given above must be done with a

plankton net (Limnological standard plankton net) with at least ⌀- 30 cm., L-80

cm. and no more than 55 µm. 3 samples of zoo-plankton must be taken at each

point – by towing from bed to surface;

• The zooplankton samples must be used to analyze the taxonomic structure of

zooplankton, number of zooplankton, biomass and abundance index, dominant

forms of zooplankton and seasonal dynamics of zooplankton;

• Benthos and bed sediments must be sampled at every point with a Ponar or Van

Veen Grab Sampler - 0.1 m2. Benthos sample must be taken at least twice or

thrice from each point (this depends on the type of ground). Furthermore, the

depth must be identified at each station;

• The benthos samples must be used to analyze the taxonomic structure of

benthos, number of benthos, biomass and abundance index, dominant forms of

benthos and seasonal dynamics of benthos. The grain-size and classification of

bed sedimentations must be given according to Udden-Wentworth scale; and

• Identification of rheophilous macro-invertebrates must be done for at least 10

stations with a landing-net with its wheel size of 200-250 microns and sizes of the

net framework must be at least 40X20 cm. The hydrobiological samples must be

conserved by using formalin solution (4%).

Study of accompanying parameters

• The Study Consultant must also monitor accompanying parameters for each of

the two dedicated study years, 7 times a year, in particular: in March, April, May,

June, July, August and September;

• The main physical-chemical parameters of water must be identified at all above-

given 29 points with a portable analyzer, in particular, the following water

parameters must be measured:

o Temperature -⁰C,

o Salinity,

o pH,

Appendix 2 79

o Dissolved Oxygen (mg/L), and

o Dissolved Oxygen Saturation (%)).

o Flow velocity (m/sec)

o Turbidity (using Secchi disk with limnological, modification: ⌀- 20 cm).

IV. Third Party Monitoring of Construction Activities

• The Study Consultant, in consultation with the Engineer and specifically with the

Engineer’s International and National Environment Specialists, will conduct ad-

hoc monthly inspections of the construction site to ensure compliance with the

requirements set out in the Contract as well as listed in the EMP.

• The monitoring results will be provided in a short report with picture log and this

will be provided to the Engineer and the Employer for further action as necessary

following each visit.

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Annex 2 - Payment adjustment system

1. It is expected that the Consultant’s team as proposed and evaluated during the selection process and approved prior to the Contract signature in accordance with ADB’s Procurement Regulations will be engaged for the entire duration of the Contract without replacement of any of its members. This especially refers to the replacement of Key Experts whose replacement should be avoided. The replacement of the experts might be acceptable only in justified and exceptional cases such as death, disability, diseases objectively hindering performance of services assigned, parental leave or resignation from the company for company’s staff members. 2. At any stage of project implementation, each request from the Consultant for replacement of a member of the Key Expert Team, which the Employer will approve will be sanctioned as follows:

Replacement of the Member of the Consultant’s Team

Permanent Deduction

FK 1-2 1 time the monthly rate

FK 3 1 time the monthly rate

LK 1 2 times the monthly rate

LK 2-6 2 times the monthly rate

LK 7-11 1 time the monthly rate

3. The payment adjustment system will not apply in case of replacement when: a) replacement is requested by the Client in accordance with the Contract; b) replacement is caused by reasons as stated in para 1, evidenced by relevant supporting documents.

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Annex 3 - Position Terms of Reference and Qualifications International Consultants – Key Staff (Terms of Reference Table 1) 1. Team Leader/Bridge Engineer: Professionally qualified civil engineer, preferably with 10 years’ experience in projects similar to the project including major bridge works, implemented under FIDIC or similar contracts, and 10 years’ experience on a managing position as a Team Leader or Project Manager. The team leader will be responsible for managing the CSC team. The team leader will report to the Client as required the matters related to the project, including providing responses to ADB’s requests, and preparing for ADB missions. 2. Senior Geotechnical Engineer: Professionally qualified civil engineer with a major in geology or a professionally qualified geologist, preferably with relevant postgraduate qualifications and with 10 years’ experience in projects similar to the project, to include geological conditions similar to those existing in the project area. The Geotechnical Engineer will be responsible to the Team Leader for all activities related to the geotechnical aspects of the project. 3. Senior Environmental/Biodiversity Specialist (SES): Professionally qualified BSc. or equivalent in environment or related field with preferably 10 years’ experience in environmental management and monitoring with some focus on biodiversity. The SES will prepare a detailed action plan including environmental monitoring checklists to be completed by the NES. The SES will be responsible for implementing the BAP, he/she will commission various surveys and monitoring activities by specialists for implementation of the BAP financed under the Contractor. He/she will work closely with the Contractor staff on biodiversity focused tasks and will also work on more general environment focused tasks such as conducting environmental training and briefings to provide environmental awareness on ADB and the government environmental safeguards policies, requirements and standard operating procedures in conformity with the government’s regulations and international practice for project and RD Safeguards staff; ensure baseline monitoring and reporting of Contractor’s compliance with contractual environmental mitigation measures during the construction phase. The specialist will be responsible to the Team Leader for all environmental aspects of the project, including ensuring that the project’s environmental management plan is implemented effectively. The SES is also expected to both support development of as well as participate in the cumulative impacts working group proposed in the BAP to improve hydropower management upstream and reduce sand/gravel quarrying in the Rioni River. The working group is described in more detail within the BAP. National Consultants – Key Staff (Terms of Reference Table 2) 1. Deputy Team Leader/Road Engineer: Professionally qualified civil engineer, or equivalent, preferably with 15 years’ experience in road construction, of which preferably 10 years should be spent on site in the administration and supervision of road and bridge works. The Deputy Team Leader will be responsible to the Team Leader for the effective implementation of the project, for overall management of the national consultant team members, and for facilitating the relationship between the CSC and the RD. 2. Bridge Engineer: Professionally qualified civil engineer, or equivalent, preferably with 10 years’ experience in bridge design and supervision of major bridge construction. The Bridge Engineer will be responsible to the Bridge Engineer for all bridge-related aspects of the works.

82 Appendix 2

3. Geotechnical Engineer: Professionally qualified civil engineer, or equivalent, preferably with 10 years’ experience in the geotechnical aspects of major infrastructure projects. The Geotechnical Engineer will be responsible to the Senior Geotechnical Engineer for all geotechnical-related aspects of the works. 4. Quantity Survey Engineer: Professionally qualified survey engineers, or equivalent, with preferably 10 years in the setting out and measuring major infrastructure projects, including preferably 5 years for road projects involving major bridges. The Surveyor will be responsible to the Deputy Team Leader for all survey-related tasks on their respective projects. 5. Quality Assurance/Materials Engineer: Professionally qualified civil engineer or equivalent, preferably with 10 years’ experience in projects similar to the project, including establishing and implementing quality assurance systems, measurement and payment systems, document management systems, and other related systems, preferably for projects financed by ADB or similar funding agencies. The Quality Assurance/Materials Engineer will be responsible to the Team Leader for all matters related to overall quality assurance and document management, as well as for all investigation, testing, and reporting related to materials to be used on the project, including oversight of contractor’s laboratories, site testing activities, review and approval of concrete and asphalt mix designs, etc, and for the work of the CSC’s materials team 6. Environment Specialist: Professionally qualified BSc in environment or related field or equivalent qualification with preferably 5 years of relevant experience. The Specialists will work with the Senior Environmental/Biodiversity Specialist in environmental management and monitoring of the project to ensure compliance with the environmental aspects of the project’s civil works contracts. A background in biodiversity is considered preferable in this context.

7. National Resettlement Specialist: Professionally qualified BSc or equivalent in social development or related field, with preferably 5 years’ relevant experience. The Specialist will be responsible to the Team Leader for all aspects of resettlement management, implementation of social safeguards, complaints resolution, gender and all other aspects of the project’s land acquisition and resettlement tasks. 8. Occupational Health and Safety Specialist: Professionally qualified specialist in all health and safety aspects of major civil works construction, high level bridgeworks, and road works, preferably with 5 years of experience with projects similar to the project. The specialist will be responsible to the Team Leader for ensuring that all aspects of the project comply with the health and safety provisions of the project’s civil works contracts, and with relevant Georgian laws and regulations. 9. Road Safety Engineer: Professionally qualified civil engineer or equivalent with relevant experience, to manage the day-to-day implementation of the project’s road safety awareness program. 10. Hydrologist: Professionally qualified engineer in the field of hydrology with preferably 10 years of experience in supervision of the construction works. Experience in transport or hydro power plant projects will be considered as an advantage. The Hydrologist shall be responsible towards Team Leader for conducting the basic hydrology research for the Engineering team. The duties involve but are not limited to measuring properties such as stream volume and flow, collecting and testing water samples, evaluating the environmental impacts of

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pollution and predicting the future effects of water-related phenomena, such as erosion and sedimentation build-up.