world bank document · 2016. 7. 11. · multi-donor trust fund for aceh and nias mis monitoring...

Document of

The World Bank

Report No: ICR00002182

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(TF-56894)

ON A

MULTI-DONOR TRUST FUND (MDF) FOR ACEH AND NIAS GRANT

IN THE AMOUNT OF US$42 MILLION

TO THE

REPUBLIC OF INDONESIA

THROUGH THE

AGENCY FOR RECONSTRUCTION AND REHABILITATION FOR ACEH AND

NIAS

FOR THE

INFRASTRUCTURE RECONSTRUCTION ENABLING PROGRAM

June 20, 2012

Indonesia Sustainable Development Unit (EASIS)

Sustainable Development Department

East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 15, 2012)

Currency Unit = Indonesian Rupiah

IDR 1,000 = US$0.107

US$1 = IDR 9,385

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

BRR Bureau for Rehabilitation and Reconstruction for Aceh and Nias

EIA Environment Impact Assessment

FM Financial Management

FMR Financial Management Report

GOI Government of Indonesia

IBRD International Bank for Reconstruction and Development

ICB International Competitive Bidding

IDA

IFR

International Development Association

Interim Financial Report

IPM Infrastructure Program Management

IREP Infrastructure Reconstruction Enabling Program

LARAP Land Acquisition and Resettlement Action Plan

MDF Multi-Donor Trust Fund for Aceh and North Sumatra later simplified to

Multi-Donor Trust Fund for Aceh and Nias

MIS Monitoring Information System

MOF

MoPW

Ministry of Finance

Ministry of Public Works

MOU Memorandum of Understanding

NCB National Competitive Bidding

NGO Non-Governmental Organization

O&M Operations and Maintenance

PIU

PDCS

Project Implementation Unit

Planning, Design and Construction Supervision

PMU Project Management Unit

TA Technical Assistance

Vice President: Pamela Cox

Country Director: Stefan G. Koeberle

Sector Manager: Franz R. Dress-Gross

Task Team Leader: Khairy Al-Jamal

ICR Team Leader: Khairy Al-Jamal

ICR Primary Author: Reda Hamedoun

Republic of Indonesia

Infrastructure Reconstruction Enabling Program

CONTENTS

Data Sheet

A. Basic Information ............................................................................................. i B. Key Dates ......................................................................................................... i C. Ratings Summary ............................................................................................. i

D. Sector and Theme Codes ................................................................................. ii E. Bank Staff ........................................................................................................ ii

F. Results Framework Analysis .......................................................................... iii G. Ratings of Project Performance in ISRs ..........................................................v

H. Restructuring (if any) ..................................................................................... vi I. Disbursement Profile ....................................................................................... vi

1. Project Context, Development Objectives and Design ..............................................1 2. Key Factors Affecting Implementation and Outcomes .............................................6 3. Assessment of Outcomes .........................................................................................15

4. Assessment of Risk to Development Outcome ........................................................18 5. Assessment of Bank and Borrower Performance ....................................................18

6. Lessons Learned.......................................................................................................21

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners..........23

Annex 1. Project Costs and Financing .........................................................................25 Annex 2. Outputs by Component.................................................................................26

Annex 3. Economic and Financial Analysis ................................................................29 Annex 4. Grant Preparation and Implementation Support/Supervision Processes ......30 Annex 5. Beneficiary Survey Results ..........................................................................33 Annex 6. Stakeholder Workshop Report and Results ..................................................34 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ....................35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ......................38 Annex 9. List of Supporting Documents .....................................................................41 MAP .............................................................................................................................42

A. Basic Information

Country: Indonesia Project Name:

ID-Aceh-Infrastructure

Reconstruction

Enabling Program

(IREP)

Project ID: P100218 L/C/TF Number(s): TF-056894

ICR Date: ICR Type: Core ICR

Lending Instrument: ERL Borrower: REPUBLIC OF

INDONESIA

Original Total

Commitment: US$42.00M Disbursed Amount: US$35.655M

Revised Amount : US$42.00M

Environmental Category: B

Implementing Agencies:

Bureau for Rehabilitation and Reconstruction for Aceh and Nias (BRR); and

Ministry of Public Works (MoPW)

Cofinanciers and Other External Partners:

Multi-Donor Trust Fund (MDTF)

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 02/17/2006 Effectiveness: 09/13/2006

Appraisal: 03/27/2006 Restructuring(s):

01/07/2008

01/10/20091

04/15/2009

06/30/20102

Approval: 06/30/2006 Mid-term Review: 09/30/2008 12/19/2008

Closing: 10/31/2009 12/31/2011

1. Shifting costs between components and reviewing the scope of the IPM and PDCSs

through operational Bank clearance without formal amendment.

2. The date in the project portal was misquoted as June 28, 2010.

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

ii

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank

Performance: Satisfactory

Overall Borrower

Performance: Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments

(if any) Rating

Potential Problem Project

at any time (Yes/No): Yes

Quality at Entry

(QEA): None

Problem Project at any

time (Yes/No): No

Quality of

Supervision (QSA): None

DO rating before

Closing/Inactive status:

Moderately

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

General water, sanitation and flood protection sector 25 9

Ports, waterway and shipping 25 18

Roads and highways 25 67

Water supply 25 6

Theme Code (as % of total Bank financing)

Other urban development 100 100

E. Bank Staff

Positions At ICR At Approval

Vice President: Pamela Cox Jeffrey Gutman (acting)

Country Director: Stefan G. Koeberle Andrew D. Steer

Sector Manager: Franz R. Drees-Gross Keshav Varma

Project Team Leader: Khairy Al-Jamal Aniruddha Dasgupta

ICR Team Leader: Khairy Al-Jamal

ICR Primary Author: Reda Hamedoun

iii

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)

Support the BRR's strategy for infrastructure reconstruction by providing high quality

technical assistance (TA) in order to ensure that infrastructure program management,

planning, design and construction management follow adequate standards, and to support

BRR in overall coordination of the infrastructure reconstruction program.

Revised Project Development Objectives (as approved by original approving authority)

The development objectives and key indicators were not revised.

(a) PDO Key Performance Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Post Tsunami infrastructure reconstruction and development Monitoring

Framework for Aceh and Nias

Value

quantitative or

Qualitative)

N/A

Framework

developed and

applied

N/A Framework was

complete and applied

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/17/2010

Comments

(incl. %

achievement)

Achieved

Indicator 2 : A strategic plan for infrastructure reconstruction in Aceh and Nias exists

Value

quantitative or

Qualitative)

N/A Plan to be prepared

and utilized N/A

Plan exists and has

been utilized

throughout the

project.

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/31/2011

Comments

(incl. %

achievement)

Achieved

Indicator 3 : Donors and stakeholders are consulted on the plan and design of projects

that support implementation of the strategic reconstruction plan

Value

quantitative or

Qualitative)

N/A

Donors are

continually updated

on implementation of

the strategic

reconstruction plan.

N/A

Donors are fully

informed on program

and project activities,

now totaling

US$ 207 million of

infrastructure from

the strategic plan and

additional financing

of US$ 36.7 million

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/17/2010

Comments Achieved

iv


Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

(incl. %

achievement)

Indicator 4 : Proper safeguard measures are integrated into project preparation plan

Value

quantitative or

Qualitative)

Safeguard

framework is

established.

All IRFF supported

sub-projects will

adhere to the

safeguard framework.

N/A

IPM consultants

established a project

tracking system that

incorporated all

safeguard aspects of

projects. All

subprojects

supported by IRFF

adhered to the

framework.

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/31/2011

Comments

(incl. %

achievement)

Achieved

Indicator 5 : Projects funded by BRR through IRFF are matched to articulate demands

of local governments.

Value

quantitative or

Qualitative)

None

Initial and updated

investments are

discussed and agreed

on with local

government and other

stakeholders. All

O&M MOUs to be

signed with local

government.

N/A

All IRFF investments

were included in the

annual investment

plans, and identified

as a priority by local

government. All

MOUs for O&M and

asset transfer were

signed for local

government project.

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/17/2010

Comments

(incl. %

achievement)

Achieved

Indicator 6 : Works meet the specifications of the technical designs.

Value

quantitative or

Qualitative)

N/A

All works comply

with the design

specifications.

N/A

In general, quality of

works is good and in

compliance with the

design specifications.

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/31/2011

Comments

(incl. %

achievement)

95% Achieved as two subprojects were not completed and required design

reviews.

Indicator 7 : Projects are of higher quality standards than those prepared and

implemented prior to the TA.

v


Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Value

quantitative or

Qualitative)

N/A

All sub-projects

under the TA will be

of higher standards

N/A

In general sub-

projects prepared

under the IREP were

of higher quality and

bids were subject to

minor variations and

designs were more

detailed.

Date achieved 09/01/2006 12/31/2011 12/31/2011 12/31/2011

Comments

(incl. %

achievement)

Achieved

(b) Intermediate Outcome Indicator(s)


Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : All Consultants are appointed and functioning.

Value

quantitative or

Qualitative)

No consultant is

selected

All consultants

including IPM,

PDCSs and FM are

selected.

N/A

All consultants

including IPM,

PDCSs and FM

were selected and

functional

Date achieved 09/01/2006 03/31/2007 03/31/2007 03/31/2007

Comments

(incl. %

achievement)

Achieved

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived

Development

Objective

DO

Implementation

Performance

IP

Actual Disbursements

(US$ millions)

01 03/20/2007 Moderately

Satisfactory

Moderately

Satisfactory

0.00


Satisfactory

Moderately

Satisfactory

7.28


Satisfactory

Moderately

Satisfactory

17.80


Satisfactory

Moderately

Satisfactory

28.13

vi


Satisfactory

Moderately

Satisfactory

33.99


Satisfactory

Moderately

Satisfactory

34.89

H. Restructuring (if any)

Restructuring

Date

Board

Approved

PDO change

ISR Rating at

Restructuring

DO IP

Amount Disbursed

at Restructuring in

US$ Millions

Reason for

Restructuring &

Key Changes

Made

01/07/2008 MS MS 7.28 Review the scope of

the impacted area.

01/10/2009 MS MS 16.28 Review the scope of

IPM and the PDCSs

and shifting costs

between

components.

04/15/2009 MS MS 17.8 Restatement of GA,

MoPW became the

implementing

Agency after

closure of BRR and

extension of

Closing Date to

June 30, 2010.

06/30/2010 MS MS 28.13 Extension of the

closing date to

12/31/2011.

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

Country and sector context

The tsunami of December 26, 2004 killed or left missing more than 230,000 people in

Indonesia, and the total reconstruction and development program for Aceh and Nias was

estimated to cost up to US$9 billion through 2009. The estimate of the damage to the

housing sector alone was US$ 1.4 billion, with the demand for new housing ranging from

93,000 to 120,000 units. The government of Indonesia (GoI) created a dedicated

Rehabilitation and Reconstruction Agency– Badan Rehabilitasi dan Rekonstruksi (BRR)

- to lead the recovery efforts. The BRR’s priorities were to (i) strengthen coordination

between donors and government agencies; (ii) ensure pledges for infrastructure are

prioritized and matched with sector needs; (iii) improve the quality and pace of

infrastructure reconstruction supporting housing/settlements; (iv) develop institutional

resources for sustainable infrastructure operations and services after the BRR’s operating

period; (v) improve cost effectiveness through quality management and competitive

procurement; and (vi) and increase the efficiency and flexibility of the capital works

planning and budgeting process.

Rationale for Bank Assistance

As a leading international development agency in the area of post-disaster reconstruction,

with a longstanding engagement with relevant government agencies in Indonesia and

around the world, the Bank was well-position to support BRR in its reconstruction

efforts. In addition, the Bank’s involvement in Indonesia’s community-driven

development program also provided a platform to quickly replicate stakeholder

consultation and participation mechanisms and to scale up financing to specifically

address reconstruction needs. GoI had also asked the Bank to take a lead in coordinating

the donor community, requesting suggestions on how this could be handled in practice. In

March 2005, the Bank formally established the "Multi-donor Trust Fund for Aceh and

North Sumatra" (MDTFANS), later simplified to "Multi Donor Fund for Aceh and Nias

(MDF)". The Bank also provided at the same time a grant of US$25 million as a

contribution to the MDF. In all, 15 funding agencies contributed an initial US$550

million to the MDF. The Bank and the European commission channeled all their support

through the MDF, while the Nordic countries, the Netherlands and Belgium provided half

or more of their funding through the MDF.

Project Background and development

It was noted that most of the funds pledged to support rehabilitation and reconstruction in

Aceh were quickly programmed by the GoI, leaving mostly gaps to finance minimum

needs in certain critical areas. BRR’s strategy, therefore, was to focus on the remaining

2

available funds to ensure that they were allocated to cover these gaps. Of the donor

resources, the MDF was the largest source of programmable funds with US$230 million

still available to be programmed at the time IREP was approved. Among other priorities,

BRR’s medium-term strategy called for the main utilization of the remaining MDF

resources for the reconstruction and development (i.e., building back better) of

infrastructure in the areas most damaged by the tsunami and earthquake in Nias and

Aceh.

In order to guide the investment program during BRR’s assignment period, BRR

developed an Infrastructure Reconstruction Strategy. This strategy encompassed three

phases: (i) the execution of the ongoing MDF-supported Immediate Action Plan (IAP)

agreed upon in November 2005 to meet urgent infrastructure needs; (ii) the proposed

Infrastructure Reconstruction Enabling Program (IREP), which would provide technical

assistance for the mobilization of human resources and technical support to BRR,

provincial, and local governments; and (iii) investment in infrastructure works by BRR

and other donors, including through a proposed Aceh Infrastructure Reconstruction

Facility (IRFF). The implementation of IRFF would be financed through the MDF and

the GoI and the technical support would be managed under IREP.

IREP was designed to work within the prevailing infrastructure framework and strategies

of GoI, and with numerous agencies and donors involved in the reconstruction effort in

Aceh and Nias. In conjunction with IREP, local and provincial governments were

expected to build project management capacity; prepare infrastructure development

plans, feasibility studies, detailed designs, comprehensive procurement planning; and

provide support during construction supervision.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as

approved)

The development objective of the project was to support BRR's strategy for infrastructure

reconstruction by providing high quality technical assistance in order to ensure that

infrastructure program management, planning, design and construction management

follow adequate standards, and to support BRR in overall coordination of the

infrastructure reconstruction program.

The Key Performance Indicators for this development objective at appraisal were:

1. Development of a sustainable and strategic long-term infrastructure reconstruction plan for Aceh and Nias;

2. Donors and other stakeholders are consulted on the infrastructure reconstruction plan and design projects that support implementation of the strategy;

3. Technical designs created during project appraisal ensure appropriate quality measures have been included;

4. Consultant teams and local and provincial governments prepare projects that incorporate adequate procurement and financial management practices and safeguards

measures;

3

5. The scale of funding committed to implement projects submitted by local and provincial governments to BRR as part of their AIPs;

6. Projects are of higher quality standards than those prepared and implemented prior to the TA;

7. Increased participation of local and provincial government staff to incorporate appropriate safeguards measures and financial management and procurement

practices during project design and implementation.

In principle, the PDO and the performance indicators are consistent in the project

documents with very minor discrepancies between the PAD and the Legal Agreement.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators,

and reasons/justification

The development objectives and key indicators were not revised.

1.4 Main Beneficiaries

In a narrow sense, the direct beneficiaries were the BRR, Ministry of Public Works

(MoPW), project management unit (PMU), project implementation unit (PIU), and local

consultants who saw their capacity in infrastructure management, design, monitoring and

construction supervision improve. However, the true beneficiaries in a broader sense

were the people of Aceh and Nias (around 1.6 million inhabitants), who benefitted from

the strengthened capacity of these entities to plan and implement infrastructure

reconstruction projects in the disaster affected area.

IREP was strategically integrated with the Infrastructure Reconstruction Financing

Facility (IRFF), another project executed with the Bank acting as Partner Agency on

behalf the MDF. To a large extent, IRFF focused on financing the infrastructure sub-

projects prepared with technical assistance from IREP. IREP worked with 12 local

governments: 7 local governments in the West Coast Logistical Area, 2 in Nias, the

remaining 3 local governments being Aceh Besar, Banda Aceh and Sabang. At the

provincial level, IRFF included strategic projects, prepared by the provincial government

with IREP support. Some of these projects were located outside the jurisdiction of the 12

local governments to cover the East Coast and central parts of Aceh but this was

consistent with amendment no. 1 to the Grant agreement.

1.5 Original Components (as approved)

The US$42 million program consisted of five consultancy TA components to be

implemented over a three-year period:

Component 1 - Infrastructure Program Management (US$19.5 million) to support the mobilization of a highly skilled Infrastructure Program Management (IPM) team

deployed within the existing BRR structure to coordinate the infrastructure program

and its activities at the macro level. These experts were mobilized to provide

assistance to BRR in eight specific areas: (i) overall strategic infrastructure planning

for Aceh and Nias, as per the BRR Infrastructure Reconstruction Strategy; (ii)

4

management of the infrastructure reconstruction program in Aceh and Nias; (iii)

review of local and provincial governments’ plans for infrastructure investment as a

basis for BRR funding; (iv) quality control, supervision, and monitoring o f BRR-

funded infrastructure projects; (v) procurement support; (vi) safeguard support for

BRR-funded infrastructure projects; (vii) anti-corruption support for BRR-funded

infrastructure projects; and (viii) management and coordination of other IREP

consultant teams. At all times, Consultants in Components 2, 3, 4, and 5 reported

directly to BRR, not the IPM Consultants. The first two tasks of this component

referred to the entire infrastructure reconstruction program throughout Aceh and Nias,

as these areas encompassed the work of both the government and other development

partners. The remaining six activities focused on BRR funded activities.

Component 2 - West Coast Infrastructure Planning, Design, and Construction Supervision (US$l0 million) to finance a technical team to undertake the planning,

project preparation, and implementation work for the West Coast Logistical Area.

This team provided assistance to the local governments in three main areas: (i)

strategic planning; and (ii) project design and implementation; and (iii) institutional

development support, including the development of a long term maintenance strategy,

and training. The assignment led to the mobilization of a project team with skills in

infrastructure planning and program management, institutional development,

implementation methods of essential services delivery, technical design and

procurement, construction planning and management, and construction supervision.

As planned, all works were conducted in close collaboration with local governments

and public works and in consultation with local communities.

Component 3 - Nias Infrastructure Planning, Design, and Construction Supervision (US$5 million) to support mobilization of a technical team to undertake the planning,

project preparation, and implementation work for the Nias logistical area. As planned,

the work focused on repairing the transport network. The consultant team provided

assistance to the local governments involved in three main areas: (i) strategic

planning; (ii) project design and implementation; and (iii) institutional development

support and training. All works were conducted in close collaboration with local

governments and public works and in consultation with local communities.

Component 4 - Strategic Infrastructure Project Planning, Design, and Construction Supervision (US$6 million) to finance a technical consulting team to undertake the

formulation, investment planning, design, and project implementation work for

strategic infrastructure projects at the provincial and or national level, or with local

governments not covered by components 2 and 3. This component was designed to

strengthen the ability of BRR and that of the relevant governments to carry out

project identification, appraisal, and implementation. The Provincial Government

participated in the selection and development of the “strategic projects” and

participated in management of the TA consultants. The infrastructure projects

financed under this TA were mainly related to ports, and key roads managed by

provincial, national or local government entities.

5

Component 5 - Financial Management of BRR-financed Projects (US$1.5 million) to

strengthen BRR’s capacity to put in place the financial management framework

required to ensure that it meets all its fiduciary responsibilities with respect to this TA

and other BRR investment projects. This assistance was provided by a team of

experts that, initially, was located within BRR and later worked side by side with the

PMU at the MoPW. Financial management of BRR-financed projects included PMU

and PIUs to establish and maintain financial accounting and statement arrangements

for project activities undertaken and expenditures incurred at all project locations,

including monitoring the operation of internal controls over implementation of the

contracts.

1.6 Revised Components

None.

1.7 Other Significant Changes:

Amendment No.1, “Review of the Project Area”, January 7, 2008: This amendment effected the change in the project service area and introduced the “West Coast

Logistical Area" which covers the West Coast Kabupatens of Aceh Jaya, Aceh Barat,

Nagan Rava, Aceh Barat Daya, Aceh Selatan, Aceh Singkil, Simeulue, Aceh Basear,

Banda Aceh and Sabang, and such additional Kabupatens as may be agreed by the

Association in writing. The original Legal Agreement referred only to Aceh Jaya,

Aceh Barat, Nagan Raya, Aceh Barat Daya, Aceh Selatan, Aceh Singkil and

Simeulue.

Amendment No. 2 “Grant Agreement Amendment and Restatement”, April 15, 2009: BRR closed on April 16, 2009, and the implementation of the project was entrusted to

the national Ministry of Public Works (MoPW). The institutional and legal transition

to MoPW was carried out smoothly. Thus, the implementing agency for IREP (and

IRFF) became the MoPW. The new PMU was tasked to handle the remaining

construction works in Aceh and Nias, and was staffed with many former BRR

officials for a seamless continuation of the project implementation. The IREP grant

agreement was amended to reflect the new arrangements and to extend the closing

date to June 30, 2010 in order to match the closing date of IRFF, at that time.

Amendment No. 3 “Extension of closing date”, June 30, 2010: the Regional Vice President approved a second closing date extension, which brought the cumulative

extension to 26 months.

Shifting costs between components, January 10, 2009: As detailed in Annex 1, the actual costs by component changed substantially from those estimated at appraisal.

The main change was to reduce the resources dedicated to Components 1 and 2, and

increase financing for Component 4. This was done to accommodate changing needs

and priorities, to take advantage of opportunities to increase project effectiveness and

efficiency, to make the best use of project resources and to balance the

6

implementation schedules of components 2, 3 and 4. The changes were requested by

the government, agreed by the Bank, and did not require amendments of the grant

agreement.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Institutional design: Four months after the devastating tsunami and earthquake, the GoI

established the BRR to manage the reconstruction program of Aceh with an estimated

budget of $6-9 billion. According to the end of first year assessment (December 2005),

the first reconstruction priority was the provision of housing (which was well underway

and progressing adequately). However, as the second reconstruction priority (rebuilding

and restoring essential infrastructure) made very little progress, BRR recognized the need

to apply better spatial planning to handle the reconstruction program. Accordingly, Aceh

and Nias were divided into five areas (North Coast, West Coast, Nias, East Coast and

Middle Aceh). BRR recognized the complexity of the scope and diversity of the skills

needed to implement the reconstruction program and the need to centralize the program

management under a limited number of relatively large consultancy services. The

thinking was to expedite the reconstruction process and to ensure adequate design and

construction quality, which led to the design of the project under its five components, as

described above. Based on its long experience and technical resources to respond to

emergency situations, the World Bank was requested to prepare IREP.

Lessons learned from similar operations: In order to optimize the design of IREP, BRR

incorporated lessons learned from its first year of operation. This included: (i) the need

for supplemental capacity in the BRR to implement and supervise infrastructure projects;

(ii) the imperative that local and provincial governments identify their priorities within a

framework of good practice; (iii) coordination across development partner and

government reconstruction programs; (iv) the allocation of sufficient resources for close

supervision of works to ensure quality construction; and (v) the importance of engaging

communities and other stakeholders throughout the project cycle.

BRR developed a Blueprint for projects before Component 1 was in place, due to the

time pressures of the reconstruction agenda and BRR’s own short life term. BRR

anticipated that this list would need to be revised at some stage and that the designs

would need to be updated. The scope of services of the PDCS consultants accounted for

such a need and all construction works under IRFF were subject to design review prior to

their tendering. Moreover, the priority list was adjusted to reflect the changing demands

from the local authorities and to account for socio-economic and political factors

(especially along the East Coast and Middle Aceh).

Design of the implementation arrangements: During the project's preparatory stage,

within the overall time constraints, the implementation arrangements were detailed and

set up satisfactorily (including necessary fiduciary requirements related to procurement,

7

disbursement and financial management). This was instrumental in the satisfactory

implementation of the project. By preparing the project in six months, the preparation

team also distinguished itself in terms of responsiveness, a crucial attribute in the

development of emergency operations. BRR had established the PMU, led by senior BRR

staff, to oversee project implementation and to interface with all consultants and donors

with the support from the IPM.

Assessment of risks: The financial management and procurement risks were rated as

substantial and high respectively, due to the limited capacity of BRR. However, the

project design addressed these risks adequately through: (i) the hiring of the FM

consultant as described in component 5 of the project; (ii) the hiring of a Procurement

Advisory (PA) team financed by DFID; (iii) the activation of internal FM controls; (iv)

application of BRR and MoPW internal audits; and (v) the hiring of the services of

external audits.

All in all, the project responded to GoI’s reconstruction priorities to produce a simple

design that avoided implementation difficulties. However, in hindsight, several areas

were identified where project preparation could have been improved:

Sub-project identification: The process of ex-ante definition of the portfolio seemed consistent at the time with the short timeframe available. However, this method made

it inevitable that some important projects would be missed, for some feasibility

studies to be insufficient at the outset (in water supply or ports) or for some projects

to be included for political reasons rather than reconstruction realities. Bank

supervision missions noted that there was pressure from BRR to approve incomplete

and preliminary designs.

Capacity Building: IREP design aimed at achieving both short-term reconstruction objectives and longer-term objectives of enabling and capacity building of local

governments. Though an emphasis on capacity building was rightly identified during

project preparation as crucial to ensure the sustainability and maintenance of the

assets produced by the program, the lack of resources devoted to it made its

achievement unrealistic. With a large reconstruction program to deliver in a tight time

frame and an under-sourced capacity building component, planning, procurement and

contract management could not always be conducted in a satisfactory manner.

Institutional design: IREP designed a one-door communication system, in which any communication between the consultants and the Bank, as well as coordination with

related central government level agencies would be carried out through the PMU. A

good concept in principle, this communication system turned out to be burdensome

for all parties involved. For an understaffed PMU, it meant an increased workload

while it had to manage a large infrastructure program. For the consultants, it resulted

in incomplete information sharing and time delays in receiving guidance and

instructions, as the flow of information with the gatekeeper (the PMU) became

increasingly imperfect. This situation was even clearer when the BRR was closed and

the MoPW became the implementing agency. For the Bank, it meant putting in place

8

a track for information gathering and monitoring that was independent from the PMU

in some instances, which led to an unnecessary increase in the workload for

consultants and the Bank task team.

Role of Infrastructure Program Management (IPM) Team: The IPM was designed to assume the responsibilities of a “super-consultant” and trusted advisor to the BRR,

which recognized during project preparation that it lacked the adequate capacities in

terms of strategic planning and program management. However, this role proved to

be too broadly designed and overly ambitious as it tasked the consultant to provide

assistance in eight different areas (strategic infrastructure planning, management of

infrastructure, review of local and provincial government plans, quality control,

procurement, safeguards, anti-corruption efforts, and management and coordination

of the four other IREP consultant teams).

2.2 Implementation

Scope, timing, and effectiveness of IPM consultancy. In mid-2008, it was decided that IPM should limit its focus to areas of core implementation, including program

management and quality assurance, and reduce its engagement in capacity building.

IPM had been delivering work outside of its original TORs in response to the client’s

requests, while at the same time having delays in the submission of key deliverables.

After consultation with the Bank, the BRR decided to refocus IPM resources to

optimize delivery of IRFF sub-projects and to save costs.

The IPM consultant was mobilized late, after BRR had started its planning. This

undermined the ability of IPM to influence strategic planning at the early stage and

did not help to properly position IPM to be in the driver’s seat in terms of leading the

reconstruction planning process. Moreover, the improper use of funds by the IPM

consultant as proven in 2010 led to a lack of trust between the consultant and BRR

and later MoPW. Accordingly, MoPW decided not to extend the contract of the IPM

consultant beyond its amended end date in March 2010.

Flexibility in allocating resources between contracts. In the course of implementation, the five consultancy contracts financed under IREP were amended to

reflect evolving priorities, adequately balance the allocation of resources among

consultants, and adapt to the closure of BRR. Due to the dynamics of the

reconstruction program, this proactive flexibility on the part of BRR and MoPW was

pivotal in facilitating the mobilization of adequately staffed international consultants

to ensure proper designs and good construction quality. This was particularly true for

the Planning, Design, and Construction Supervision (PDCS) activities. BRR regularly

reassessed whether the PDCS consultants had the right resources in place, and

contracts were amended to reflect these assessments.

Restructuring: As explained in more detail in Section 1.6, the project was restructured three times to clarify the geographic scope of the project, formalize the transition to a

9

new implementing agency, and extend the closing date twice. The restructurings were

fairly routine in nature, but helped ensure proper targeting, smooth implementation,

and alignment of IREP with IRFF (and in particular with the additional financing and

extension of IRFF).

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

M&E Design: The project design included well-conceived, appropriate outcome

indicators that were clearly linked to the development objectives, verifiable either

quantitatively or qualitatively, and attributable to project interventions. There were some

minor discrepancies between one section of the PAD and another, but the substance was

the same, and the intent was clear. Due to the importance of the M&E in both guiding

project implementation and assessing outcomes, and the shortcomings in the capacity of

BRR, the design called for the IPM to provide support in carrying out the M&E functions.

The design called for the development of a computerized Monitoring Information System

(MIS) which was expected to facilitate the monitoring of outcome indicators and routine

project implementation and financial management for both IREP and IRFF.

M&E Implementation: The IPM successfully produced regular M&E reports, which were

integral parts of the Semi Annual Reports that compiled data provided by the PDCS and

FM consultant (and confirmed by IPM quality assurance staff). In addition, the PMU

developed a Monthly Portfolio Review for a quick monitoring of the progress of all sub-

projects under IRFF and updated the performance indicator matrices for both IREP and

IRFF.

The efforts of IPM to develop a stand-alone computerized MIS were not fully successful

and the system was never used as the focal database for the program. Development of the

system took longer than expected, and ultimately the BRR developed its own MIS system

which made a separate system specifically for IREP redundant and unnecessary. While

the MIS was intended to monitor both physical progress and financial performance, the

shortcomings and delays in the MIS system did not significantly hinder monitoring of the

KPIs, many of which were qualitative in nature.

M&E Utilization: The data and information gathered from the field were compiled by the

IPM consultant and communicated to the PDCS consultants to review the designs of

some sub-projects. This is clear in some roads projects where the soil turned to be

unstable and the need to strengthen the road shoulders was eminent in order to mitigate

the impact of potential landslides. Moreover, in order to maximize the returns from

BRR’s MIS, it had been centrally connected to Bappenas’ MIS which enabled sharing the

project information at the central level.

2.4 Safeguard and Fiduciary Compliance

Procurement

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All major procurement, such as the selection of the design review and construction

supervision consultants, FM consultant, and program management consultant was

performed in a timely fashion and was generally satisfactory over the course of the

project. BRR was assisted by the Procurement Advisor (PA), financed by DFID, to

prepare all of the early procurement packages. Only the delay in the appointment of

individual consultants for program management and supervision of the sub-projects

carried out under the relatively minor gaps of IRFF was moderately unsatisfactory.

IREP also provided support to BRR and the MoPW to set up adequate procurement

procedures for the procurement of the 56 contract packages (signed value of US$223.62

million) carried out under IRFF and followed by four contract packages (signed value of

US$31.51 million) under IRFF Additional Financing. In particular, IPM was tasked to:

Provide direct support to BRR and local government procurement activities during the first 1.5 to 2 years.

Identify and agree with BRR alternate and appropriate procurement procedures and regulations for each set of investments.

Assist the preparation of tender documents for international and national procurement on BRR, National or World Bank Guidelines.

Provide guidance on procurement, contract packaging and bid documentation to other agencies.

Recommend the contract packaging and detailed strategy of the works for BRR.

To this end, IPM provided comprehensive support throughout the procurement process

and proceeded to the establishment of a Central Procurement Unit (CPU) within BRR.

The Bid Documents were standardized for National Competitive Bidding (NCB),

applying to works costing up to US$5.0 million, International competitive Bidding for

large civil works (ICB large works) costing above US$10.0 million. The procurement

manual was prepared detailing the procurement implementation steps and decision- tree

for the procurement committees and CPU. The standard operating procedures were

designed. The packaging of works, identification of appropriate document procedures and

regulations for the identified sub-projects were developed. IREP, through IPM, also

provided advice to the CPU on the finalization of the procurement plans.

In addition to this, the IPM advised the procurement committees on bid evaluation,

advised the CPU on procurement decisions, investigated complaints, reviewed the bid

evaluation reports, addressed comments from the Bank, prepared winner notifications,

letters of acceptance and draft contracts, revised (after the Bank supervision mission of

September 2009) the General Conditions of Contract Clause 38 for both NCB and ICB

contracts to provide an allowance for physical contingencies or provisional sums for

unforeseen items, and prepared the procurement completion report of the 56 IRFF

contract packages.

As a result, the IRFF procurement phase was completed in 18 months with an average

time for procurement from advertising to contract signing of 150 days for NCB and 210

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days for ICB. The Bank supervision mission of December 2008 noted that procurement

process was being carried out efficiently and in accordance with the scheduling process.

Financial Management

The FM aspects were in general in compliance with Bank procedures (and with

additional standards as the financial controls included a Supreme Audit evaluation report,

as well as an annual external audit evaluation report). The external audit reports also

concluded with unqualified compliance. However, the following issues were identified

during the early stages of project implementation:

Delayed payments during project implementation: The delays adversely affected the PDCS consultants’ work and their ability to retain staff and conduct field supervision.

The delays were mostly due to the bureaucratic complication of yearly reappointment

of PPK/Satkers who had responsibility and authority in the budget allocation

(DIPA’s) process. However the PPK/Satker reappointment delay was reduced by

PMU and MoF at the Bank prompting from three months to one month.

The Interim Financial Report (IFR) submissions were chronically late, despite the Bank missions’ systematic reminders that PMU (through IREP 5) should submit them

45 days after each quarter closes. The Bank also recommended that the PMU should

implement a financial penalty to any underperforming consultants who submitted

their reports late. These delays were also a reflection of the dysfunctional MIS, as the

FM consultant (IREP 5) could not rely on a comprehensive and up to date monitoring

database and information flows with the three other consultants (IPM and the three

PDCS) were not smooth. IREP 5 did not have access to some contract amendments,

or IPM did not receive updated physical progress information from PDCS in a timely

manner. Numerous occasions arose where the FM consultant received conflicting

information from the contractors and the PDCS consultant on the progres of works,

especially in Nias. These delays improved during the later stages of the project as the

FM consultant proactively compiled and consolidated IPM and PDCS reports.

The financial control systems were less than satisfactory as the oversight role of IREP 5 was limited. IREP 5 did not have adequate access to all documents and was

unable to verify all payments as per their TORs and project SOPs. A Bank

supervision mission in April 2009 noted that only 30% of payments were verified by

the FM consultant. Corrective measures, including that no payment request should be

processed without prior verification from the FM consultant, were raised by the Bank

and led to the gradual improvement of FM oversight as noted in the ISRs.

Environment

Although IREP’s scope encompassed only the procurement of services to support

infrastructure reconstruction, the PAD noted that it would have, in practice, the effect of

programming very significant resources for reconstruction in Aceh and Nias. Key

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environmental impact areas to be considered included: resource extraction impacts

(primarily sourcing of sand, gravel and other quarry material) and construction impacts

(excavation, fuel spills, noise, dust, obstruction to drainage, pollution and sedimentation

of water courses).

The approach followed was to task the IPM team to support BRR efforts in meeting the

environmental safeguards requirements by providing advice to BRR on all safeguards-

related issues and in assisting it in drafting action plans, preparing an Environmental

strategy for approval by BRR, engaging additional and specialist consulting support to

prepare all required social and environmental studies (AMDAL, UKL/UPL, and LARAP)

and to ensure that contractors and suppliers operated in accordance with accepted

contractual safeguard requirements.

It was agreed from the start that the Indonesian AMDAL legislation and procedures

would satisfy the Bank’s requirements, particularly for the planning and design of the

packages. During the 2007 Bank supervision mission, the Bank and BRR agreed to

implement a modified system of quality assurance designed by the IPM safeguards team

that was set out in a draft Environmental Management and Monitoring Protocol. The

Protocol linked the design and planning phase to the implementation of the project and

applied to all project packages. In effect, this created the Construction Environmental

Action Plan (CEAP) as a unique feature applying to all IRFF sub-projects. However, 22

projects which were already approved or in the procurement stage at the time of the 2007

supervision mission were excluded from the new CEAP requirement.

Overall, environmental management during implementation was satisfactory, and the

Bank task teams showed serious interest and concern for good safeguard management.

This engagement was particularly visible in the following areas:

Regulatory requirements, including Bank review and clearance: Most regulatory requirements were met, and approval by GoI and review and clearance by the Bank

were issued. It must be noted, however, that some environmental assessment studies

were not up to Bank standards, which cleared some with the condition that a

supplementary CEAP be done for the construction stage. Also, the Bank’s

environmental specialists reviewed most AMDAL studies received, plus a sample of

the UKL/ UPL documents, and their quality was considered to be generally

acceptable.

Bank supervision: In addition to the Bank’s regular supervision missions, Bank staff based in Banda Aceh carried out periodic field visits to review construction progress,

quality and safeguards aspects. As a matter of practice, the key findings were

provided immediately to the BRR, IPM and the three PDCS upon return from the

field, with detailed recommendations and target dates for completion of actions.

Environmental monitoring, reports and actions: The environmental monitoring site visits and subsequent reports by the PDCS consultants added significant value in

terms of quality improvement of implementation. A number of serious design flaws

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were identified by these field visits. Actions for improvements, including specific

instructions to the contractors by the supervision engineers, were recommended by

the monitoring teams. They also provided coaching and mentoring to contractors and

supervision field staff on how to do better environmental management.

Interventions addressed at contractors: The CEAP model proved to very useful and positively impacted environmental performance under the construction contracts. For

instance, a template for a CEAP for a typical road project was prepared by the IPM

consultants, which helped to improve the quality of the plans, and ultimately the

quality of implementation. Two other contracts (Calang Port and Kota Sigli WS) used

a CEAP prepared with the help of the PDCS consultants and implementation quality

was found to be generally better.

Social Safeguards

Social safeguard policies triggered by IREP were, as outlined in the PAD, involuntary

resettlement and indigenous peoples. Although, the actual supervision and monitoring of

land acquisition/resettlement and compensation was within the scope of IRFF (IREP was

only tasked with providing consultancy services in this area), it should be noted that

timely compensation was provided for the ten sub-projects involving land acquisition.

Bank supervision missions regularly provided updates on the status of land acquisition

and documentation, and monitored the submission of IPRs. Where specific issues arose,

the Bank was pro-active and diligent. When the Tj. Meulaboh-Pante Cermin kabupaten

road subproject was about to acquire a piece of land with an old house on it, the Bank

requested IPM to confirm that a negotiation between the BRR and land owner would be

done properly, that compensation levels would be set at or above the market price and

that remaining land plots could be used for productive activities.

IPM was tasked to provide advice to BRR, help it prepare social studies, and assist in

ensuring that all social safeguards requirements were met. It was agreed for social

safeguards that the project would strictly follow Bank policies and procedures (the main

areas of difference between Bank and local policy included land acquisition,

compensation, resettlement, indigenous people, gender and social inclusion). To this end,

IPM developed social management plans for any subproject with a potential social impact

on surrounding communities, such as the Lohseumawe Drainage and Reservoir project

and Calang-Meulaboah Road. Both local and provincial governments were cooperative

and fairly compensated impacted people.

2.5 Post-completion Operation/Next Phase

The sustainability and maintenance of the assets was probably the most important issue

affecting the project. The PAD did identify the main sustainability risks arising from the

expiration of the BRR mandate in April 2009 (i.e., before the closure of IREP and IRFF):

(i) local and provincial governments might not own the projects financed by BRR, which

could result in inadequate maintenance in the post-BRR period, and (ii) local government

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revenues derived from natural resources would likely decline as Aceh’s share of oil and

gas revenues would decrease after 2009.

Out of the 56 IRFF sub-projects, 13 sub-projects, comprising 34 % of the total asset cost

were handed over to the central authorities (5 ports to the Ministry of Transportation; and

8 national roads to the MoPW). Those packages are being managed following the

national standards and using national budget allocations.

9 provincial road sub-projects comprising 32% of the total asset cost were handed over to

the Aceh and North Sumatra provincial governments. As with other provincial assets,

these roads are being managed by the Provincial Dinas with adequate maintenance

budget allocations.

For the remaining projects (34% of the total assets), MoUs for assets handover were

signed between BRR and local governments (based on a standard template drafted by

IREP consultants), but the financial capacity of local governments did not always allow

them to devote sufficient funds for maintenance. In a context where decentralization

efforts have not been complete in the project area (infrastructure maintenance fund

allocation have been historically centralized in Jakarta), local governments do not always

dispose of sufficient funds to meet expenditures or prioritize new construction over

maintenance of existing assets. While the MOUs served to ensure smooth asset transfers

to the local authorities, the low capacity of these local authorities to manage these assets

remains a concern which is shared among the entire Aceh reconstruction program.

The Bank supervision teams were mindful of these risks, but efforts to remedy the risks

posed to sustainability of the assets produced limited results in terms of actual allocation

of maintenance funds. These efforts included:

The review by all PDCS and IPM of district level projects to assess if there were local government initiatives critical for successful and long-term operation of the

investment (these reviews were added to MOUs as addenda).

Local governments capacity assessments, which were implemented for 12 provincial/district governments, including: Aceh province, Banda Aceh, Sabang,

Aceh Besar, Aceh Jaya, Nagan Raya, Aceh Barat, Aceh Barat Daya, Aceh Selatan,

Aceh Singkil, Nias and Nias Selatan. Consequently, capacity building program plans

were produced. The assessments were conducted through a series of focus group

discussions that aimed at identifying strengths and weaknesses of local governments

in terms of reconstruction management and maintenance programming.

A request to the PMU in May 2010 to prepare a complete listing on each IRFF contract containing, among other data, an action list for ensuring final ownership and

sustainability.

The donors and MDF called upon GoI to ensure that the maintenance costs were

budgeted for and transferred to the local governments. It is worth noting that the local

governments have received some capacity building, through other projects like

15

Earthquake and Tsunami Emergency Support Project (ETESP) funded by ADB, Aceh

Emergency Response and Transitional Recovery project managed by the UNDP, Support

to Local Governments and Community Planning project, funded by GTZ and other

projects funded from USAID, EU, CIDA, JICA, the Netherlands and France. This needs

to be considered in the design of any future capacity building program to avoid

duplication.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

The project objectives remain highly relevant to the development priorities of Indonesia.

The development of large-scale infrastructure remains crucial to the country, and is a

pillar of the Bank’s engagement (Core Engagement 2) as outlined in the 2008-2012

Country Partnership Strategy (CPS). The document recognizes the need to strengthen the

accountability and capacity of institutions to deliver better infrastructure outcomes.

The project objectives are also highly relevant to the Bank’s strategy to play a major role

in disaster reconstruction, helping to reduce Indonesia’s vulnerability to natural disasters

as outlined in the CPS (Core Engagement 5). The document stressed that the Bank would

continue deepening the relationships established with Bappenas and the local

governments of Aceh and Nias in supporting selected elements of the Government’s

actions to strengthen natural disaster resiliency.

Implementation arrangements were consistent with the country policy to build capacity

within national institutions. After BRR closed in 2009, the implementing agency of IREP

became the MoPW. The new PMU was tasked to handle remaining construction work in

Aceh, and was staffed with many former BRR officials for continuity.

3.2 Achievement of Project Development Objectives

Provision of high quality technical assistance in order to ensure that infrastructure

program management, planning, design and construction management follow

adequate standards (Moderately Satisfactory):

The project strongly supported the BRR’s strategy for infrastructure reconstruction of

Aceh and North Sumatra by providing high quality technical assistance and capacity

building to BRR and MoPW. The project in effect enabled the implementation of the

IRFF by financing the technical assistance needed to perform the project implementation

management activities including procurement, financial management, quality control and

quality assurance, safeguards framework assurance and monitoring, implementation

monitoring and the design and construction supervision of all activities under the IRFF.

All major consultancy firms required to manage the implementation of IRFF were

appointed.

16

In general, and given the time constraints at the beginning, the project fulfilled its

primary objective in terms of the quality of the technical assistance provided. All 56 sub-

projects under IRFF, except for Siron Water Pipe Bridge and Siggli Water Intake, were

subject to detailed engineering design reviews and adequate construction supervision. In

some cases, designs were adjusted to take into consideration new findings in the field,

especially with respect to soil characteristics to mitigate for land-slides where road

shoulders are steep and/or the soil is unstable. The two failing sub-projects mentioned

above (Siron Water Pipe Bridge and Siggli Water Intake) couldn’t be finished before the

companion IRFF project closed. Thus, they have subsequently been reviewed and

redesigned and reconstruction is now underway from the MoPW’s own budget. As a

commitment guarantee, the involved PDCS liability was protected by renewing

performance liability insurance to anticipate any shortfall that may be identified due to

design fault or improper construction supervision.

Support BRR in overall coordination of the infrastructure reconstruction program

(Moderately Satisfactory):

The project also supported BRR and MoPW in the overall coordination of the

infrastructure reconstruction program through the IPM consultant. The IPM consultant

provided solid support to BRR with regards to managing the work programs,

performance and outputs of the three PDCS consultants and the FM consultant in charge

of the implementation of four other components of IREP. It strengthened the coordination

arrangements with the PDCS consultants, notably in terms of quality assurance and

control, construction supervision, monthly certificates preparation and program revisions

such as the gaps and actions on Bank Aide-memoires. IPM regularly monitored their

performance and discussed findings with the PMU, prompting the issuance of jointly

formulated action plans. IPM performance was also solid in terms of environmental and

social safeguard compliance of all stakeholders, as IPM consultants had established a

project tracking system that incorporates all safeguard aspects of projects.

As discussed earlier, there were some shortcomings in the IPM consultants’ overall

effectiveness, as the workload and number of deliverables under the original TORs were

not matched by IPM capabilities and staffing. In particular, the performance of IPM was

found lacking in terms of completing the MIS, and at an early implementation stage,

quarterly and mid-term reporting, PIPs and quality assurance were lagging behind. The

very high turnover of IPM leadership and expatriate staff also affected its coordination

capacities and strained its working relationship with BRR, PMU and the four other

consultants. In May 2008, the Bank recommended to BRR to reduce the scope of works

of IPM in areas such as capacity building and planning, which further reduced the

capacities of IPM. Ultimately, the IPM contract was cut by almost a third, and the

completion date was moved from June 2010 to March 2010.

3.3 Efficiency

17

The performance of BRR is worth noting as being efficient, especially against the

backdrop of the very real constraints following the tsunami and earthquakes of 2004. In a

short time, the BRR was able to lead the implementation of a US$6+ billion investment

program including the 56 sub-project under IRFF.

However, the midterm review noted that all in all, the project provided low value for

money. While IPM was supposed to serve the overall infrastructure construction process

(all GOI, BRR and other donor projects), the consultant worked almost exclusively on

IRFF sub-projects. PDCS consultants also almost exclusively worked on IRFF sub-

projects. As a consequence, the ratio of cost of the overall TA provided by IREP (US$42

million) to the capital investment (US$200 -300 million) was relatively high.

On the other hand, the ratio of the cost of the design and construction (i.e., only PDCS)

on IRFF capital investment was around 11%, putting it within the Indonesian good

practice range (8-12%).

3.4 Justification of Overall Outcome Rating

Rating: Moderately Satisfactory

The project achieved its primary development objective of supporting the BRR's strategy

for infrastructure reconstruction by providing technical assistance in order to ensure that

infrastructure program management, planning, design and construction management

follow adequate standards. IREP also managed to support the BRR/MoPW in the overall

coordination of this large infrastructure program, and enabled the 56 IRFF sub-projects to

come to fruition in a timely and adequate manner, for the benefit of the people of Aceh

and Nias. However, as discussed earlier, monitoring (through the failed MIS

implementation), and capacity building of the local authorities could have been improved.

In summary, IREP achieved its development objectives, albeit with moderate

shortcomings. It remains highly relevant to the country infrastructure and disaster

mitigation priorities. During the implementation, quality assurance, financial

management and post-completion operation and maintenance problems were identified

and mitigated for the most part. As such, an overall rating of moderately satisfactory is

justified.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

IREP enabled the construction of 56 sub-projects including Ports, Roads, General Water

Sanitation/Flood Protection and Water Supply. Although no socio-economic impact study

was conducted, it seems that the project has positively impacted the livelihoods of Aceh

and Nias through (i) the improvement of sea and land connectivity and mobility; (ii) the

improvement of livelihoods for the local community and the stimulation of local

economic growth (increasing the number of cargo boats and docks loading and unloading

18

consumer items, processed products and crops. In particular, cloves and crude palm oil

have increased by more than 20%); (iii) the development of new economic growth

contributors such as restaurants, shops, hotels and public services facilities (which all

increased the districts’ disposable income); (iv) the improvement of Banda Aceh’s solid

waste management through the construction of a sanitary landfill with recycling and

composting capacity; and (v) the improved provision of clean water supply.

(b) Institutional Change/Strengthening

The project provided an intense on-the-job training to the PMUs, PIU and other staff of

Bappenas, MoF, MoPW and the provincial and local governments staff in program

design and implementation, engineering designs, construction supervision and financial

management. The implementation arrangement initiated by BRR was adopted by MoPW

after the closure of BRR. Moreover, MoPW maintained the PMU structure after IREP

closed.

(c) Other Unintended Outcomes and Impacts

NA

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

NA

4. Assessment of Risk to Development Outcome

Rating: Moderate

The IREP program has enabled proper design and construction of good quality

infrastructure and has mitigated the risk of short life and/or failure of the assets. As

mentioned earlier (see Section 2.5), the majority of large IRFF sub-projects are managed

at the national and provincial levels, where capacity to maintain them is adequate.

However, sub-projects which were transferred to the local authorities might very well be

affected by poor asset management and maintenance. This significant risk is currently

being addressed by central, provincial and local governments.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Satisfactory

The Bank Task Team ensured that IREP’s overall development objectives were closely

aligned with both GoI and Bank strategies on infrastructure management and disaster

mitigation. This alignment, combined with sound implementation arrangements,

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facilitated timely completion without compromising environmental concerns or social

safeguards. The program attracted the attention of the highest management level in the

Bank including the close involvement of its regional Vice President for East Asia Pacific.

The design ensured timely delivery of the majority of the project development objectives.

The IREP was designed for carry out a disaster response program covering 12 districts in

Aceh Province and Nias Island. The program was successful in supporting the 56 priority

sub-projects previously identified throughout the design, procurement, supervision and

implementation stages.

Considering the time constraints during the IREP preparation stage, the IPM’s role

(especially in terms of balancing the effectiveness and the wide geographic scope) was

too ambitious. Some of the IPM functions, such as the project supervision of QA, were

found to be overlapping with the PDCS role. As a result, BRR streamlined the IPM ToRs,

limited such functions to the PDCS and requested the IPM to be more focused on

implementation management activities until its contract ended.

(b) Quality of Supervision


Bank supervision is rated satisfactory. Task Team Leaders initially followed the project

from Washington DC but were in continuous contact with infrastructure team members

who were based in Banda Aceh. This turned out to be critical for such a large size post-

disaster reconstruction program. Moreover, in late 2010, the TTL was re-located to

Jakarta which further enhanced the quality of supervision. This supervision set up and the

permanent presence of Bank staff in the reconstruction areas ensured continuous Bank

oversight throughout project implementation. The Bank’s supervision strategy resulted

in relatively high supervision costs which were financed from the MDF and which

considered the success of the project a top priority.

While implementation difficulties did occur, the pro-activeness of Bank supervision

could be noted in a number of aspects, such as:

Working with the PMU systematically to address weaknesses in reporting and in

financial management.

Increased attention to technical design, implementation quality and achievement of

quality outcomes.

Designing post-BRR institutional arrangements with MoPW, MoF and Bappenas.

Moreover, the Bank’s policies and procedures were applied consistently. Supervision

missions were conducted in a professional and constructive manner, and mission teams

consistently included the experts needed to discuss relevant supervision topics and issues.

The timing of formal supervision missions (on average twice a year and supplemented by

frequent routine supervision missions by the TTLs and the task team members who were

based in Banda Aceh) was appropriate and comments received from PMU and

BRR/MoPW staff indicated a respectful working relationship and a flexible approach by

20

Bank staff. Aide Memoires, Management Letters, ISRs and other project

communications and documents were completed in a timely manner with clear references

to needed actions covering all aspects of project components, safeguards and fiduciary

issues.

(c) Justification of Rating for Overall Bank Performance


The Bank's overall performance rating is based on satisfactory ratings for both quality at

entry and supervision.

5.2 Borrower Performance

(a) Government Performance


Performance of GoI was satisfactory, especially in terms of the strong and sustained

commitment to the project development objective. The agencies (MoF, MoPW and

Bappenas) turned out to be extremely cooperative and very effective in taking decisive

action in a timely manner, in particular with regard to the Bank recommendations on

implementation activities, including channeling the budget allocation (DIPA) and

preparing sufficient yearly budget allocations.

(b) Implementing Agency or Agencies Performance


Performance of the implementing agencies was satisfactory. BRR and the MoPW

protected the integrity of the project and sustained its development objective. As an

independent agency, BRR performed effectively and was able to channel and manage a

reconstruction effort valued more than US$6 billion in only 4 years. This fast pace was

supported by the strong authority which BRR was granted which enabled it to avoid most

of the bureaucracy faced by line ministries.

The slowdown of the implementation was clearly noticed following the closure of BRR

and the handover of the implementation to the MoPW where the PMU functioned more

as a Program Management Unit and effective implementation was mostly managed by a

number of PIUs which sometimes were difficult to coordinate. This setup required the

Task Team to devote extra efforts to ensure compliance with Bank fiduciary and

safeguards procedures and guidelines.

(c) Justification of Rating for Overall Borrower Performance


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Both GoI and the Implementing Agencies (BRR and MoPW) managed to implement the

IREP with satisfactory performance.

6. Lessons Learned

Lessons were learned for both future operations in both Indonesia and future similar

reconstruction TAs in other countries, particularly in the following areas: Contract

Management and Flexibility; Social and Environmental safeguards management;

Implementation Arrangements; Maintenance and Capacity building; Stakeholder

Participation and Commitment; and Implementation Support Arrangements.

a) Future operations in Indonesia

Contract Management and Flexibility: BRR did not allow any sub-project to make any

change that would have led to an increase of the signed contract price. Thus, and to

account for any design changes, the only way was to reduce the scope of the works. This

has led to some incomplete works. While this policy gave BRR a tighter control on the

budget, it also adversely affected some sub-projects. Incomplete works were grouped

under the “Gaps” packages and were tendered separately, which turned out to be more

costly. Also, loading the consultancy contracts with reimbursable payments resulted in

some fund misuse and false reporting on reimbursable expenses (as was the case in the

IPM contract). To mitigate this, it would be best to design such contracts with very few or

no reimbursable payments in the future. Alternatively, more rigorous FM monitoring

would be required.

Social and Environmental Safeguards management: the projects handled the design and

implementation of 56 sub-projects of diverse types and in different locations and

environment, leading to many safeguards issues. These were addressed through: (i) the

allocation of provisional budgets to implement environmental management plans as part

of the civil works contracts; (ii) staffing of all PDCS consultants with the relevant

safeguards specialists; (iii) IPM QA and QC functions included the safeguards aspects

(iv) close involvement and commitment of the implementing agency, provincial and local

governments to implement LARAPs satisfactorily; and (v) close Task Team monitoring

and follow up with Indonesian counterparts.

b) Future similar reconstruction TAs in client countries

Implementation arrangements: The establishment of BRR as the entity responsible for

the implementation of the reconstruction program of Aceh undoubtedly boosted the

construction pace. BRR was empowered to operate outside the daily bureaucratic

constraints, a setting that made the mobilization of financial and human resources easier.

Moreover, BRR was created with a limited lifetime to enable the line ministries, like the

MoPW in this case, to pursue their roles seamlessly after the closure of the BRR. Also,

BRR established its own Procurement Central Unit (PCU) to manage all procurement

activities.

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On the other hand, the daily implementation was fragmented between a large number of

changing PIU/Satkers and thus many procurement committees. The PMU had no control

over the implementation and was mandated with the program planning. This made it

sometimes difficult for effective communication. Also, a large and comprehensive

reconstruction program such as the one supported by IREP was bound to be fraught with

continuous changes in engineering designs, issues with the flows of information and

unforeseen events.

More care will be needed in future operations in the design of roles and institutional

coordination between the Bank, the PMU and the various contracted consultants.

Implementation models for consultant management could be based on the review of best

practices in terms of progress of delivery, financial viability, quality of delivery,

environmental soundness and asset end-user satisfaction. Having IPM assisting the

program management was not sufficient, especially where their ToRs overlapped with the

mandate of the PDCSs like in the case of the quality assurance and quality control.

Maintenance and Capacity building: In order to ensure the sustainability, as a medium-

term development objective, of built assets, mechanisms to allocate sufficient funds or

establish a maintenance fund should be effectively designed, especially in environments

where decentralization efforts are lagging. Also, it seems that a regionalized large

infrastructure program such as this one are best suited in an environment where the

capacity of the local government is sound and devolution of authority is real.

In the end, and understandably, the emphasis in this project was always on the

completion of the large building programs under institutional, budgetary and time

pressures rather than on the sustainability of these assets after handover. The project did

not put enough emphasis in effective training in infrastructure management, operation

and maintenance of local government staff, as was underscored by the reduction of

funding devoted to these activities. Local governments, on the other hand, did not

allocate funds to these training activities. Capacity building in infrastructure management

can only be effective when based on a sound analysis of the incentives and capacity of

the local government, to which assets are to be handed over. It is recommended that in

the future, local governments will allow for funding of capacity building programs in

their medium term development plans to acquire the proper skills in infrastructure

management.

Also, in some remote areas such as Nias, the working environment for outside contractors

was challenging and made it less attractive for workers to stay. This led to the termination

of some contracts and when local contracts were subcontracted, the quality of works was

not always satisfactory. To mitigate this, it is thus recommended that capacity building in

similar regional reconstruction projects include local contractors in the future.

Stakeholder Participation and Commitment: The project is a successful example of

stakeholder participation and commitment, which led for instance to the satisfactory

design of the sub-projects priority list and the support of the various authorities to

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facilitate and safeguard project implementation. Stakeholders included the central,

provincial and local governments; local communities, NGOs, Donors, MDF and the Bank.

Implementation Support Arrangements: Both the MDF and the Bank acknowledged the

necessity to be closer to the project area, and the MDF supported the opening of a field

office in Banda Aceh. This proximity to the center of activity greatly facilitated

implementation on a day to day basis and provided continuous support to the client.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

In general, the government of Indonesia was satisfied with the project’s outcomes. The

original implementing agency (BRR) was closed in 2009. The borrower completion

report and comments on the ICR were prepared by the Ministry of Public Works

(MoPW), and were mostly related to contract management.

BPK’s audit in 2010: The BPK (Government Auditor) criticized the PMU for awarding contracts which exceeded Engineer Estimates and for the allocation of

environmental budget for some sub-projects under IRFF. The PMU requested a

formal clarification from the Bank supporting their views. The Bank invited the BPK

and clarified that this can happen under normal circumstances and this is why the

Bank issued the no objection letters to the award of contracts. Nonetheless, BPK

requested the PMU to re-bid these contracts but the Bank considered that this was not

a sufficient basis for rebidding. Moreover, the Bank addressed a general letter to BPK

explaining that the Bank, as a matter of general practice, only issued a no objection

letter and that it was the implementing agency’s responsibility to approve and sign the

contracts as a legal entity. The Bank had also made it clear that making provisional

sums to implement environmental action plans was not against sound procurement

principles and that it was up to the implement