shelter and infrastructure rehabilitation project nagorno-karabakh

Shelter and InfrastructureRehabilitation Project

Nagorno-Karabakh

Assessment

August 1998

Prepared by: Graham SaundersOn behalf of: CRS/Caucasus

Contents

1. Introduction

2. General programme issues and technical resources

2.1 Staffing2.2 Selection of target villages2.3 Selection of beneficiaries2.4 Building standards and the quality of construction2.5 Contractors2.6 Materials and suppliers2.7 Labour2.8 Statutory controls and regulation2.9 Building design and construction assessments2.10 Government investment in shelter and infrastructure rehabilitation

- Nagorno-Karabakh2.11 Local initiatives2.12 Scope of works - shelter and infrastructure rehabilitation to date2.13 Property ownership2.14 Local consultants2.15 Use of asbestos sheeting

3. Programme methodology, construction procedures and administration

3.1 Community participation and self-help

3.1.1 Project oversight, the Community Working Group mechanism, and local contributions

3.1.2 Scope of works3.1.3 Standard agreements3.1.4 Selection of contractors and construction teams3.1.5 Salaries and costs3.1.6 Control of the works - site supervision3.1.7 Quality of materials and workmanship3.1.8 Payment procedures3.1.9 Completion and handover3.1.10 Defects liability, future making good and maintenance

3.2 Contracted supply of labour and materials

3.2.1 Project oversight3.2.2 Scope of works3.2.3 Standard contracts3.2.4 Selection of contractors and subcontractors - tender process3.2.5 Salaries and costs3.2.6 Control of the works - site supervision3.2.7 Quality of materials and workmanship3.2.8 Payment procedures3.2.9 Completion and handover

Shelter and Infrastructure Rehabilitation Project Nagorno KarabakhAssessment prepared by Graham Saunders on behalf of CRS/Caucasus August 1998 2

3.2.10 Defects liability, future making good and maintenance

4. Recommendations

4.1 Scope of work4.2 Selection of target villages - “cluster areas”4.3 Phasing of the work4.4 Establishment of Community Working Groups - CWG mechanism4.5 Selection of beneficiaries4.6 “Hybrid” self-help approach and local contributions4.7 Preparation of construction assessments4.8 Tripartite agreements4.9 Selection of contractors4.10 Subcontractors, local construction teams and contributory labour4.11 Tender process4.12 Materials and suppliers4.13 Form of contract4.14 Control of work - site supervision4.15 Building standards4.16 Payment procedures4.17 Financial penalties4.18 Defects liability4.19 School rehabilitation works4.20 Water system rehabilitation works4.21 Disposal of asbestos sheeting4.22 Staffing

5. Proposed implementation plan

5.1 Project activities5.2 Project timetable

AppendixA Summary of contacts and visits

Attachments#1 Community Working Group Protocol#2 Standard Tripartite Agreement#3 Contract for Construction Assessments#4 Standard Scope of Works#5 Standard Construction Assessment Form#6 Main Building Contract#7 Minor Works Contract

(Note: All the above documents may require further modification)


1. IntroductionThis assessment has been carried out on behalf of CRS/Caucasus, to assist the implementation of the shelter and infrastructure rehabilitation programme entitled “Humanitarian Assistance for the Victims of the Nagorno-Karabakh Conflict”.

The broad terms of reference are as follows:

To explore and advise on general programme issues and the available technical resources (staff, contractors, suppliers, local consultants, logistical support).

To develop appropriate construction administration mechanisms, with reference to the programme objectives and methodology.

To assist the overall programme refinement and initial implementation in the field.

This assessment has been carried out in Nagorno-Karabakh, complemented by background research in Armenia, with reference to both recent and current shelter and infrastructure projects. This research is complemented, where relevant, by regional experience in appropriate methodologies and procedures.

The results of the site exploratory visits and meetings are summarised in Sections 2 & 3. Section 3 includes a particular emphasis on the relative possibilities and benefits of the utilisation of both community self-help and contracted labour and supplies. Section 4 draws on this analysis and other regional experience to provide a series of recommendations for the further development and implementation of this programme. Given the current timetable and the evident urgent level of need in the communities, Section 5 consists of a proposed timetable of activities.

2. General programme issues and technical resources

2.1 StaffingPotential staff with appropriate engineering and construction backgrounds are available in Nagorno-Karabakh. Based on the Soviet education system, students graduated from technical high schools and continued, with increasing specialisation, through further education. Initial work experiences varied from assisting site supervision, to overseeing the production of construction elements in pre-fabrication plants, to working in design and construction assessment offices. Specialisation included civil engineering (roads, bridges), mine engineering, hydro-engineering (dam and water course design), and large scale public buildings, including apartment construction. Domestic house construction was typically undertaken on a self-help basis by the owner, with little engineering input. However, at district and village level, communal works were often undertaken by local construction teams, supervised by a local construction engineer. This has resulted in a broad division between what can be loosely described as major and minor construction projects: major public works projects, funded by the state, utilising the state design bureaux, state construction companies, and with structured site supervision and administrative procedures; and minor, village or private house-owner projects, with informal site supervision and minimal administrative procedures. Emergency repair works to houses and infrastructure works in the villages during and immediately after the conflict have resulted in a merging of these two approaches to construction, and hence many district- or village-based construction engineers now have substantial experience in terms of quantity and range of work. Extensive projects now underway funded by the military, including barracks, protective emplacements and supporting infrastructure, have also provided opportunities for rural engineers.


The experience of qualified engineers is based on Soviet construction administration procedures, last formally updated in 1984. These procedures can be readily modified, to incorporate developments in the construction industry in Western Europe and increasingly Eastern Europe, as well as the more stringent controls required by international donors and investors. This requires a fluency with construction as a process, and an aptitude to learn. The tightening of the control of the works also requires thorough project management and close site supervision. Staffing levels and the specific skill requirements thus required will be explored in 4.22.

2.2 Selection of target villagesAccording to the Nagorno-Karabakh Department of Social Development, a survey conducted following the 1994 cease-fire indicated that of a total of 221 settlements, 151 had been damaged. Government-sponsored initiatives and self-help schemes had repaired approximately 3,000 private dwellings and 217 apartment buildings. By January 1998, the Department of Social Development records indicated that some 44 settlements in the districts of Askeran, Martakert, Martuni, Hadrut and Shushi were still a priority for further shelter rehabilitation. Both the Minister of Social Welfare and the Director of the Department of Social Development had indicated that assistance should be primarily focused on villages that had been occupied by Azeri forces and where a majority of the houses had been burnt or destroyed by explosives. This included villages in Martakert District, notably Talish and Mataghis, and in Askeran District, in particular Khramort. The Minister of Social Welfare was also supportive of complementing the work already undertaken by the Government in a number of villages. This includes additional villages in Askeran District, Martuni District and adjacent villages in Hadrut District. The impact of the government assistance to date is significant, aided by the rigorous criteria adopted to ensure that only priority war-victim families were included to maximise the spread of the programme. However, this has inevitably resulted in some inconsistencies, with smaller villages of less military significance failing to receive any assistance.

One practical consideration is the geographical spread of potential target villages, and access. Although much of Askeran District is geographically close to Stepanakert, local roads are in a poor condition, and away from the asphalt roads journey times between villages are significant. Villages in the north of Hadrut District are accessed more easily from villages in Martuni District than from Hadrut Town, which is separated by a mountain range. And Martakert District, and Martakert Town itself, is accessed primarily by the main asphalt road through the occupied territory outside of Nagorno-Karabakh.

2.3 Selection of beneficiariesAccording to the Minister of Social Welfare, the government have accurate records of each inhabitant in each settlement, and this information is updated on a regular basis. Conversations with village mayors in several settlements indicate that in several areas, notably those villages of strategic military importance, the village mayors have good lines of communication to central government. However, it is also apparent that some shifting patterns of return, either of refugee families relocating or of individual family members returning to reoccupy damaged houses, are currently not being adequately monitored.

The government had established tight criteria for the use of its own funding for shelter rehabilitation, focusing on the families of war victims. Elderly couples, single individuals, and refugee families from territory still occupied by Azeri forces, have not been assisted to date. It should be noted, however, that most families have been consulted, and have been informed that if they have not yet been assisted they are on the list. Although village mayors have been consulted over the priority lists, the final decisions were taken centrally. In a number of villages, social


cases, excluding those of families who have lost family members in the conflict, still remain unaided.

2.4 Building standards and the quality of constructionThe impact of the pre-conflict Soviet construction methodology can be felt throughout Nagorno-Karabakh, in public buildings and in other works undertaken by the state. In rural settlements, many dwellings were self-built by their owners or by local craftsmen, and although serviceable, lack good materials and thorough workmanship. The earthquake of 1988 in Armenia revealed the poor adherence to ostensibly sound construction guidelines, with substandard materials being found commonplace and negligent or fraudulent construction practices being rife. Good raw materials can be found in both Armenia and Nagorno-Karabakh, although poor production often results in a substandard product. The quarrying of limestone blocks and the production of mortar are two examples; the blocks used are often irregular and poorly finished, leading to over-sized and weakened joints, and many examples of mortar indicate poorly washed sand or minimal cement contents which results in insubstantial walling. A further example of the move towards expediency rather than quality is in the almost total decline in the production and use of lime in the mortar mix. Lime is a key ingredient in ensuring the mortar mix is flexible and water resistant. In Nagorno-Karabakh, limestone abounds, and up to 15 years ago lime kilns were active, both on an industrial scale and as a cottage industry in the rural areas. Mortar was traditionally made from sand and lime, with cement being a more recent additive to add strength. In many older, rural houses, earth strengthened with cut straw was used as mortar, and with well-cut stone this results in a good bond. One house visited in Nachijevanik, Askeran District, had been destroyed by fire on three occasions, reflecting previous conflicts with the Azeris and the Turks. The external, stone-built wall still remained; of the newer, block-and-mortar wall little remained. Other problems result from poor design, with timber ground floors being constructed below the level of the surrounding earth; no ventilation being provided for floor voids; inadequately calculated lintels and floor slabs, resulting in cracking in the plaster and poorly fitting joinery; and substandard detailing, which to roofs and gables could result in the loss or damage to roofs in high winds or heavy snow-falls. A further example of poor production can be seen in the variable standard of pre-fabricated reinforced concrete lintels. Problems include irregular shuttering; poor concrete mix, with oversized aggregate; lack of vibration, resulting in settlement of the aggregate; poorly formed reinforcement, and lack of spacing of reinforcement from the soffit shuttering during casting. Indeed, the quality is so poor that rolled steel angles are often used in place of the lintels.

In general, the repair of damage due to the conflict has encouraged a virtual disregard of construction standards in the interest of speed, and as a result of inadequate skilled supervision. The Head of the Reconstruction Department in the Ministry of Urban Redevelopment has confirmed this problem. This is exacerbated by a common problem throughout Eastern Europe and the NIS in that the government standards or “norms” are commonly quoted but rarely exist in documentary form for reference. When strictly adhered to, they result in perfectly adequate, appropriate standards of construction and finish. (This was established on a major construction project in Albania).

In rural areas, the use of local construction teams, often without engineering supervision, has resulted in substandard work. The absence of an adequate control mechanism, with reference to the end users, has lead to dissatisfaction amongst beneficiary families. As in many cases these works have been funded by the government, the good will created by the investment has been eroded by the frustrations of having a house inferior to the previous building. This is heightened in the cases where the works were carried out by contractors from Stepanakert or Armenia, over which the families have no opportunity of redress.


However, there are notable examples of excellent work, in particular executed by a local construction team in Karmir Shuka(Krasni Bazar), Martuni District. This team had used good quality materials, clearly used skilled craftsmen for each trade, and finished the work well to permit the owner to follow-on with plastering and other internal works. This would undoubtedly have taken more time, and required good supervision and co-ordination between the masonry and carpentry trades. Beneficiaries, village representatives and engineers consulted are clearly aware of what techniques and detailing are both technically appropriate and achievable. The challenge is to tap into this experience, and ensure that the process to both develop the scope of works and to oversee the works on site is truly accountable.

2.5 ContractorsAlthough the state construction companies in both Nagorno-Karabakh and Armenia are still dominant, private contractors are being licensed and are beginning to compete for the small- and medium-sized contracts. Several of the private companies are in fact offshoots of state companies, with only the word “state” being omitted from the company name (for example, “Haygyughshinnakhagits”). According to both state and private companies interviewed in both Nagorno-Karabakh and Armenia, neither sector has any significant tax advantage, and that state companies are not underbidding through unrealistic overheads. For private companies, the current tax burden is in the region of 17-20% of turnover; at least one contractor in Nagorno-Karabakh indicated that he was pleased to be contributing to “his” state. The state companies do have the advantage of access to equipment, and to the government design and cost estimation offices. Private companies, however, are able to find facilities in a market that has severely contracted since 1988, and there appears to be a healthy collaboration between the two sectors to ensure that every opportunity to create employment is taken. All companies still use the standard Soviet-era “norms” to put together tender offers, with appropriate coefficients for the respective districts to reflect their location and accessibility. However, the private companies are now responding to the competitive market, and are willing to negotiate according to market prices. Nominating contractors, amongst private contractors, is a fairly novel idea; for the larger, government-funded projects, a cross between nomination and invitation is utilised, with a government-appointed tender committee making the final selection.

In the 8-9 larger state companies in Nagorno-Karabakh, typical staffing levels are 100-120 total staff, with 7-10 qualified engineers per company. The recent yearly turnover for one medium-sized state company was $400,000. One private company interviewed, who had carried out some small but prestigious projects, had 5 qualified engineers and, until recently, had had 50 staff in total. The Head of the Construction Department in the Ministry of Urban Development has provided a short-list of 44 companies for consideration for work in Nagorno-Karabakh, including contractors from several districts of Nagorno-Karabakh and some from Armenia. Approximately 30% of these companies are state, the remaining 70% private. Included in the private companies are some very small co-operatives, who have only recently become established.

It is reported that, in accordance with a government decree, by the end of September 1998, all state construction companies are to be privatised, with all employees being the first beneficiaries of share options. This has not been confirmed, and it is unclear what initial effect this would have on the operations of these companies.

2.6 Materials and suppliersBasic raw construction materials, such as cement, sand, aggregate and masonry blocks (including limestone and “tufa”) can be sourced in Armenia and Nagorno-Karabakh. During the Soviet era, other materials, notably steel, were supplied from Russia. Other materials were imported from


elsewhere in Eastern Europe, with Czech ceramic tiles being one example. Electrical, water and sanitary fittings, as well as ceramic tiles, paint and other finishing materials, were produced locally to some degree, although of only average quality. Approximately 50% of the timber needs can provided within Nagorno-Karabakh, although specific types of wood must be imported. With political issues limiting the number of traditional sources, newer sources are being explored. Iran is one example, with the road to Goris and hence south to the Iranian border being regularly trafficked by Iranian trucks. These vehicles are bringing in glass and sanitaryware, plastic piping and paint. Materials are also being imported from Europe, with some Italian-made sanitaryware, ceramic tiles and fittings appearing in the market. Suppliers are also researching newer sources, with one importer developing contacts in Dubai as a collective point.

In both Armenia and Nagorno-Karabakh, pre-conflict production plants are no longer operational - the temporarily abandoned stone quarries of Askeran and Martakert in Nagorno-Karabakh being prime examples. Small-scale production of some building components is being carried out locally, for example a newly-created timber mill for the production of roofing, ceiling and flooring elements in Talish, Martakert District. However, in Nagorno-Karabakh the major issue to be addressed is the “recycling” of building materials from the abandoned Azeri settlements, particularly in the occupied territory outside of Nagorno-Karabakh. Investigation has revealed that not only are individuals looting the sites of finished materials such as cut stone blocks, roofing materials, fittings and furniture, but that the state construction companies are also sourcing their supplies of stone blocks from these settlements. Site inspection of any current construction project will reveal the use of irregular, second-hand stone blocks, often with the remnants of paint or plaster finishes. A visit to Agdam, an Azeri-majority town in occupied territory with a pre-conflict population of reputedly 110,000 people, reveals the extent of the looting. However, with such a policy being effectively condoned by the government by their inaction, and in the absence of functioning quarries, contractors and other builders have no other option.

2.7 LabourIn the currently depressed economy, there is no shortage of labour. Skilled labour is an issue, as indicated in 2.4, although this is focused on the need for skilled supervision. The leading contractors in Nagorno-Karabakh, both state and private, retain a core staff of experienced specialists, and for works within reach of their base will not recruit additional local labour. In rural areas, local construction teams have been used to carry out recent rehabilitation works, although the quality of works is thus dependent on the level of skills available locally. Typical salary levels in the leading companies are $50-60 per month for basic labouring, rising to around $80 for specialists. It should be noted that the limited salary differential reflects the quantity of work perceived to have been carried out, and the lack of emphasis on the need for higher standards of specialist works.

2.8 Statutory controls and regulationThe regulation of the construction industry still relies on the Soviet-era mechanisms and “norms”, and the efficiency of the government departments responsible for overseeing administrative procedures. As indicated in 2.4, the “norms’, when used and adhered to on site, do provide for reasonable regulation of the standards and quality of construction. Current procedures focus more on the distribution of construction projects and the tendering and selection processes. Completion and handover are, in theory, viewed as a key step at which regulations can be brought to bear, and a handover commission including representatives of all the utilities, the fire department, and the end-users, as well as the municipal engineers and architects, should provide final approval.


The Department of Construction in the Ministry of Urban Development is the primary body responsible for overseeing compliance with the regulations, with a team of 15 engineers based in Stepanakert and individual engineers or architects based in each district. All new buildings, excluding private dwellings, should be approved by this Department. In theory, this Department, through the district engineers, should monitor works on site to ensure that the actual works correspond with the scheme submitted for approval. However, this Department is under-resourced to face the current workload, and the approval and monitoring process is not being strictly adhered to.

2.9 Building design and construction assessmentsBased on the Soviet-era state-controlled design and construction process, separate state departments were established to handle architectural and structural design and the provision of detailed cost estimates. These departments are still operational, and are handling the design work for the completion of the stalled apartment construction projects and some of the new municipal buildings. Cost estimations are being carried out for projects proceeding for state tender, and a limited number of private cost estimation services have been established for the increasing number of privately-funded projects.

2.10 Government investment in shelter and infrastructure rehabilitation - Nagorno-KarabakhSince the cease-fire in 1994, the government have carried out the partial repair of 3,000 private dwellings and 217 apartment buildings. Preliminary assessments for this work were carried out rapidly to respond to the urgent need, and priority lists of beneficiaries were prepared in consultation with the village authorities. The construction works themselves were carried out in a variety of ways, from the use of Armenian building contractors, contractors based in Stepanakert, and locally-commissioned construction teams. As indicated above, many of the priority cases have been addressed, although with mixed results due to problems of poor workmanship. The government commission has visited the majority of the villages, and government ministers have themselves also paid visits to some of the militarily strategic villages.

2.11 Local initiativesAlthough works directly engaged by the government represent by far the largest programme of investment in shelter and infrastructure rehabilitation in Nagorno-Karabakh to date, a number of other initiatives have also be undertaken. These include individual interventions by the diaspora, through to local initiatives by the beneficiaries themselves. In Khramort, Askeran District, funding from the Argentinian diaspora has resulted in the construction of 7 new dwellings and the reconstruction of 4 others. In Talish, Martakert District, 8 dwellings had been repaired by the government, and 70 through a private initiative by a US/Canadian diocesan group. This encouraged the local community to investigate its own resources, and from the limited profits of the agricultural co-operative, they have purchased materials to provide one-room temporary enclosures in a further 26 houses.

2.12 Scope of works - shelter and infrastructure rehabilitation to dateDue to the need to maximise the effect of the limited funds available, the government investment to date has concentrated on providing building enclosures only to the priority beneficiaries. This has included the making good or partial reconstruction of the main structural walls; the making good or renewal of the roof enclosure and supporting structure; the provision of a limited number of timber joinery components plus single glazing; and in a number of cases, the installation of timber floors. Rehabilitation works have been concentrated on making good a minimum of two major rooms and the enclosed balcony. For a few families, for example in Nachijevanik and


Sarnaghbyur, Askeran District, this has also included the construction of new “starter” homes on new land either owned by the beneficiary of allocated by the village. For families who are now facing severe overcrowding as a result of changes in the family structure in the last 5/6 years, the government has also established a scheme whereby families construct the ground floor and the government will fund the construction of the upper floor. In Aranzamin, Askeran District, one family had taken up this offer, but the government contribution to date had been minimal, insufficient to enclose the house and make it useable.

A major problem faced by all the beneficiaries of the government scheme has been the lack of personal resources to complete the works and enable the houses to be reoccupied. It is clear from the numerous inspections carried out in four districts that few families have been able to carry out any additional works except for a limited extent of ceiling enclosure and the installation of missing joinery. Government works to many of these houses have been completed for more than two years, but the families’ access to capital or in-kind contributions is clearly minimal. At best, families have resorted to looting the fittings required, such as joinery and floor-boarding, from abandoned Azeri settlements. Many of these families are therefore only temporarily occupying the houses

2.13 Property ownershipIn the main towns, property rights are listed by individual occupier . In rural areas, land registries do record family title to land, but not on an individual basis. Furthermore, these records have yet to be updated, and in many cases have been destroyed during the conflict. At a local level, village mayors have assured that formal certification can be provided. Where new dwellings have been constructed to relocate families, this has either been onto land also owned by the families, or land owned collectively which has been designated for the village authorities.

2.14 Local consultantsThe majority of construction specialists, either in the fields of design, cost estimation or site supervision, are currently employed in state companies or are attempting to mirror their state job in the private sector. The effects of the last ten years and the conflict have set back the transition, and few individuals have pioneered in free-lancing. However, it is clear that several of the state departments are not responsive enough, and this will lead to opportunities for those with initiative. As indicated above, the carrying out of construction assessments is time-consuming and very labour-intensive. At least one individual has established a private service, and the carrying out of detailed assessments, to a tight brief and specific scope of work for each house, could be contracted out. Similarly, the design of new-build starter homes where required could be carried out in-house, but the use of a local architect could be considered. This could be through the state departments, or private.

2.15 Use of asbestos sheetingAsbestos-cement corrugated sheeting has been used extensively throughout Armenia and to a certain extent in Nagorno-Karabakh. Using basic raw materials, easy to produce and simple to lay, substitutes such as corrugated galvanised metal sheeting are both more expensive and more restrictive to future modification or patch-replacement. The quality of cement used in the production was invariably of poor quality, resulting in frequent breakage. Although a known health hazard, many families continue to cut and fit new sheets to replace old.

In Nagorno-Karabakh, lapped metal roofs are also common, and the roofs of many new houses are being covered in this way. As opposed to corrugated, galvanised sheeting, the use of lapped


metal is more user-friendly, permitting better jointing and better finishing at the ridge and eaves. It also is easier to work, as smaller sheets can be used, and it permits easy modification or future replacement. However, corrugated galvanised sheeting can be laid by a simple labourer, and many of the house repaired by the government have used this material. The re-use of asbestos sheeting is also very common, by both contractors and families alike. The move away from asbestos sheeting, particularly for the partial repair of a roof, will require more investigation with the communities concerned.

3. Programme methodology, construction procedures and administration

3.1 Community participation and self-help

3.1.1 Project oversight, the Community Working Group mechanism, and local contributionsIn Armenia, a sizeable number of self-help projects have been developed and overseen by local communities with a significant contribution from the community in the form of labour, materials or supporting services. These include the current UNHCR-funded programme being implemented by CRS in Armenia to rehabilitate rural schools and water systems to benefit refugee families displaced from Azerbaijan. Oxfam have also implemented a self-help shelter programme in Armenia for UNHCR. NRC, also on behalf of UNHCR in Armenia, have constructed new housing for refugees, which although using contracted labour did result in the participation of the families during the fitting out to shorten the construction period prior to the winter. In Nagorno-Karabakh, the involvement of the community in participating and contributing to rehabilitation projects has had mixed results. ICRC’s distribution of emergency shelter repair materials resulted in approximately 50% of the materials remaining unused, despite the urgent need for shelter enclosure. As indicated in 2.12 above, many of the beneficiaries of the government shelter scheme have only carried out limited additional works to the houses. Lack of capital and other resources short of looting from abandoned Azeri settlements is one reason given; the demands on the limited, able-bodied manpower available to both earn an income and carry out or fund repairworks is another. The temporary exodus to Russia in search of better paid employment has starved many villages of their key assets, and, invariably, better skilled workers. In terms of the development of local initiatives, there are examples of communities seeking better structured assistance than is available to suit local needs. In Talish, Martakert District, a local committee was formed to advise potential diaspora donors of the needs and the most appropriate form of assistance. This committee continued to oversee the works agreed, which included difficult decisions on the partial reconstruction of the school and how to prioritise investment in the water, electrical distribution network and shelter repair. The success of this committee is due to the vision and hard work of the village mayor, and is not necessarily a recipe for success in other villages.

The Community Working Groups established by CRS in Armenia, the local examples in Nagorno-Karabakh as in Talish, and the substantial frustration expressed by many beneficiaries and village mayors are not being adequately involved in the government scheme to correct the errors and inconsistencies, suggest that local project development and oversight is essential. Although local government structures at village level are overtly political, the size of the communities and the level of need does result in the engagement of all key individuals, political and non-political, in addressing the problems. School directors, long-time inhabitants, and those with acute needs, in particular mothers with children, all have a respected contribution to make, and this should be capitalised upon. It should be noted that in the absence of major assistance


from outside of the village, adhoc self-help groups of neighbours and friends have already been carrying out these tasks with the limited resources at their disposal.

With regard to the type of local contribution that may be considered, it is clear that the opportunities are more limited than in Armenia as indicated above. Instead of seeing the community leading the project in terms of management and labour, including a considerable monetary contribution both financially and in-kind, perhaps it is more appropriate to consider the community participation in the construction works as a series of linked activities which also have the goal of creating other opportunities beyond the immediate project. One idea explored in 4.12 is the establishment of specific building material production facilities. The formal establishment of the CWGs may also lead to generating ideas and resources for other projects, and the CWGs can immediately liase with the other organisations under the umbrella grant as appropriate.

3.1.2 Scope of worksSelf-help, by its very nature, can be self-limiting. In terms of shelter and infrastructure rehabilitation, the costs, material resources and skills required are significant. As indicated above, all of these requirements are handicapped by the other demands on the beneficiaries and their lack of access to more than a minimum as a direct contribution. The supply of materials, excluding looted materials, is realistically limited to raw materials sourced locally (if transport is available), or materials stored prior to the conflict. In villages that were occupied by the Azeri forces, all materials were taken or destroyed. Local, specialist labour is also available in some villages, but is in demand to provide a cash income to the family or village concerned. However, individual schemes can be tailored around whatever limited contribution a family can make, either in labour, materials or other services; for rehabilitation works to schools and water systems, basic manual labour can be found as the projects are of communal benefit, and co-operatively owned machinery, if available, can be more readily adapted for such work. Furthermore, the scope of works should be strictly defined, with reference to the terms of reference and overall standards to be achieved, prior to the detailed negotiation on the donor versus local community contribution. This will prevent the temptation to trim standards of materials and agreed salary costs to expand the scope of works, often to the detriment of the project as a whole.

3.1.3 Standard agreementsAlthough the self-help approach usually consists of a loose arrangement of separate agreements, understandings, and contracts with key specialists or suppliers, it is essential that clear commitments are obtained for each of the elements of the programme. In the case of CRS’ rural school and water rehabilitation projects, this takes the form of an agreed list of local contributions, quantified and costed. The Community Working Group also needs to be formally constituted, with a clear definition of roles and responsibilities. These mechanisms are required to ensure that the same degree of control can be exercised by the project oversight team, in this case the Community Working Group, as an investor would over a main contractor.

3.1.4 Selection of contractors and construction teamsThe oversight by Community Working Groups in the nomination of potential contractors ensures local accountability and the inclusion of key local factors and knowledge where relevant. Similarly, the use of local construction teams in theory reduces transport overheads and capitalises on local experience and good will. It is essential that the Community Working Groups are aware that the responsibility of nominating local individuals and specialists also entails responsibility for addressing problems that arise during the construction process as well. This can lead to problems, where local favouritism, albeit supported by the use of competitive selection procedures, has relied on “understandings” outside of any written agreements. For example, in Aygut, Armenia, CRS are undertaking the partial refurbishment of the village school in


partnership with the Community Working Group(CWG). The CWG nominated local specialists to do the roofing workings, and negotiated very favourable costs. However, the CWG is reluctant to pressurise the specialists to shorten the construction period or to modify some of the work done as the costs are low and the specialists are therefore already contributing themselves to the project in the form of cut-price labour.

3.1.5 Salaries and costsThe local costs for the supply of both labour and materials is the primary area for economies through self-help and local contributions. However, as indicated in 3.1.4, this can cause overall management problems. Contributions in the form of labour should be clearly structured and costed viably. Material contributions should be similarly rigorously controlled - if a certain standard of material is required, this is what should be provided, either by direct purchase or by no-cost contribution. It is understandable that the Community Working Groups should view labour costs and the provision of lower standard materials as ways of stretching limited budgets to achieve a greater scope of works. This can be addressed through good pre-planning with the Community Working Groups when this issues can be explored.

3.1.6 Control of the works - site supervisionThe control of the works on site is key to the success of any construction project. The involvement of more than one “contractor”, whether it be through the provision of materials from one or more sources or the use of one or more independent specialist, requires adept project management and a clearly structured programme of work. There can also be a lack of clarity as to who is in overall charge of making day-to-day decisions, with the authority to make key management decisions as required. The Community Working Group effectively becomes a steering committee, assisting the resolution of off-site problems and providing guidance and instruction to the site supervisor. In Armenia, on CRS projects to date, site supervision is undertaken by one member of the CWG, either an elected official or a local specialist. Overall programme management is provided by CRS, and administrative control over project expenditure remains with CRS. Drawing on another regional example, in Bosnia-Herzegovina, site supervision is undertaken by CRS, but under the guidance of the CWG of which CRS is a member. The local municipality also have technical representation, as well as political, in the CWG, to guide the CRS supervisor. CRS, through an agreement with the municipality, engage the municipality technical department to act as consultants during the implementation to capitalise on all the technical expertise available to the CWG, and to ensure a balance between donor and local issues.

3.1.7 Quality of materials and workmanshipControl over the quality of workmanship and materials is dependent on the site supervisory mechanism. As previously indicated, there is a temptation to lower standards, and hence costs, to increase the scope of works. Inspection of self-help schemes in Armenia and Nagorno-Karabakh have indicated that standards of materials and in particular workmanship are lower than desirable. This can be seen on schemes implemented by both non-governmental organisations and the government. This has resulted from weak or non-existent site control mechanisms, where either CWG ambitions have compromised the works or local communities seek to achieve only what is feasible using what is available.

3.1.8 Payment proceduresDependent on the nature of the various forms of contracts and agreements, payment procedures may take the form of bank transfers, cash payments and calculations of payment in kind. The frequency of these payments may also vary, from advance payments, to irregular payments for


specific items of work, to deferred payments in kind. Examples from the CRS school and water rehabilitation project include advance payments through bank transfer for the purchase of materials, to the reconciliation of local community contributions as a paper exercise. In Bosnia-Herzegovina, payment for some local labour contributions from beneficiary families is in the form of additional materials to the commercial value of the labour. In Albania, the community contribution of some materials was matched by bus fares to transport the materials using local public transport to the destination village. All the above approaches require sound accounting and record-keeping, and a good understanding by all involved of the overall balance sheet. This in turn requires thorough project management by the implementing agency and the necessary resources to carry this out.

3.1.9 Completion and handoverAssuming the appropriate agreements have been used and good project management and site supervision has been exercised, completion and handover should be consistent with any approach using one main contractor. As by its nature the project has been more participatory, a final technical inspection and formal approval process should involve all involved in the construction process, end-users and those responsible for the future use and maintenance. It is also essential that to conform with relevant statutory legislation, the appropriate governmental authorities are involved in this procedure.

3.1.10 Defects liability, future making good and maintenanceDependent on the specifics of the project, and appropriate defects liability period should have been agreed in any of the contracts and agreements entered into. It is customary for most specialists and suppliers to implicitly owe a “duty of care”, and hence to make good any defects that appear as a result of poor workmanship or materials. However, to prevent future acrimonious disputes and misunderstandings, these issues should be clarified, no matter how simply, prior to the commencement of the work. In the case of public works and utilities, this should include a mechanism for the long-term usage and maintenance of the building or system. This again should be addressed at pre-planning stage, to ensure that the funding for this, either directly or through an on-going local contribution, is clearly accounted for.

3.2 Contracted supply of materials and labour

3.2.1 Project oversightConstruction projects in Armenia and Nagorno-Karabakh were typically implemented through the various state departments. The brief was determined by the appropriate “investing” department - housing, education, health, state enterprise etc. The state design departments designed and engineered the scheme, and provided a costed scheme using the “norms” and the appropriate regional coefficients. These projects were in most cases projected several years in advance, so the various state construction companies were aware of the likely workload to enable them to structure yearly plans. Following handover to a state construction company, project oversight remained with the contractor. The disparate nature of the investor’s “team” meant that co-ordinated project team management would be too bureaucratic. Indeed, the administrative procedure was that the contractor was empowered to carry out detailed modifications as required - the costs were effectively fixed or accepted as being the final account according to the “norms”. Experience with Albanian building contractors who had been part of the state system which was derived form the Soviet model has confirmed that on completion the costs were amended to ensure that the projects came in under budget, but that the contractors could demonstrate that they had made a slight “profit”. Overall this has therefore lead to a significant lack of accountability of


the contractor, and in the current transition economy this “remeasurement” form of contract means a high degree of risk for the investor.

3.2.2 Scope of worksThe use of contractors with access to specialised subcontractors permits the investor to consider a full range of works as required. It should be noted that prior to the conflict, certain state construction companies focused on particular sectors, and their management procedures and skills based were structured around these works. The construction of individual private dwellings was not within the domain of state, and although the construction techniques are ostensibly little different from larger scale construction, the organisation, flexibility and approach to standards of finish do require modification. This is of particular importance when considering reconstruction and repair on multiple sites - partial demolition and clearance often result in new problems coming to light, and require significant, rapid, site decision-making. The problems experienced by some of the contractors who carried out previous repair works on behalf of the government confirms this.

3.2.3 Standard contractsMost medium- and large-sized enterprises, both state and private, use a standard form of contract generated by the government and once again originating in the Soviet-era system. This document requires counter-signing by the Ministry for Urban Development. The contract briefly defines the obligations of the contractor and the investor, and the payment terms, and is common throughout Eastern Europe. However, this form of contract lacks a detailed framework to define the methodology for dealing with the various events that are likely to occur in the life of a construction project. It is written on the understanding that the contractor has the right to determine all issues arising, from design changes, to patterns of work, to the frequency and extent of the payment, all to the cost of the investor. It is not perceived as a document to create a team or close partnership between the contractor and the investor, which is the approach taken in the US and Western Europe and now increasingly in Eastern Europe. Several private companies have expressed reservations at the simplicity of the contract and concern over a responsive legal system to support such agreements.

3.2.4 Selection of contractors and subcontractors - tender processContractors were typically nominated for specific projects dependent on their specialisation, or obliged to participate in government-supervised tender processes. Recent tender processes to complete buildings halted in 1988 have included state and private companies - one private contractor interviewed in Nagorno-Karabakh successfully won a contract through competitive tender against four state companies. Apparently, the private companies are in close communication, and as work is scarce and profit margins tight they attempt to avoid competing against one another. Tender evaluations are apparently carried out thoroughly, with the quality of the tender and the viability of the bid being taken into consideration as well as the tender offer and the contract period. This process is overseen by the Ministry for Urban Development.

Subcontractors are used, typically for specialised work such as water and sanitation works, heating installations, fitting out work where the volume of work is high (for example, installing large catering facilities). However, given the economic climate and the lack of major investment, many private companies are taking on this work themselves, expanding their skills base as necessary. Other private companies consulted expressed a reluctance to use subcontractors due to the low profit margins and a lack of confidence in the forms of contracts currently used and the legal systems to support them.


3.2.5 Salaries and costsDue to the depressed nature of the economy, salary levels in the construction sector are low. Competition for the available jobs, and the increased number of people who now have experience from the recent investments in shelter rehabilitation, have also kept salary levels down. As indicated in 2.7, typical salaries in the private sector are $50-60 per month for basic labour, $60-80 for specialists. State and private costs are apparently similar, even including the levels of taxation. However, this compares favourably with salary levels in other state sectors. Other costs are unrealistically low at present, as overhead costs fail to take into account the depreciation of machinery, vehicles and premises which are still perceived to belong to the state or on a long-term loan. Profit levels have been difficult to ascertain, although the Soviet-era guidelines set figures of 10-15% of the direct construction costs for profit. Private companies are also reinvesting income in new tools and equipment or orders for materials.

3.2.6 Control of the works - site supervisionTechnical control of the works on site was in the hands of the contractor, in accordance with the scheme design. In theory, the investor had the right to oversee the works, but in practice this right was never exercised. Advance payments were lodged with the state bank as a guarantee, should the state company default on the contract and fail to undertake the works or continue with the works agreed. The Ministry of Urban Development, through the district engineers, also had the right to inspect the works during construction, although this right was also rarely exercised. This did lead to the common complaint that foundation works were rarely to the depth of specification require under the scheme designs, as the works were never supervised. This was tragically confirmed in Gumri, during inspections carried out in the aftermath of the earthquake.

3.2.7 Quality of materials and workmanshipAll works were to be carried out with reference to the “norms”, although evidence of numerous buildings, public and private, urban and rural, leave much to be desired. Poor detail design is also a problem, a factor that contractors were reluctant to put right if additional costs would be incurred. One example is the absence of window cills, or the poor quality of folded metal of pre-cast elements used. The resulting water run-off has lead to the rapid deterioration of external rendered services, water penetration, and damp penetration to internal walls. No compliance with the “norms” was enforced, with the result that poor quality construction has become accepted as being inevitable. According to a director of a leading state construction company in Nagorno-Karabakh, payment for works done was dependent on approval by the investor (see 3.2.8). Furthermore, in keeping with contemporary construction procedures, works that could not have been foreseen at the time the contract was signed were the financial responsibility of the investor, through written instruction. Works that could have been foreseen at the time the contract was signed were the financial responsibility of the contractor. Hence, any obvious errors or omissions in the original estimate were the responsibility of the contractor to check during the tender. One can only assume that the standards of work that can be seen were deemed acceptable to all. However, examples of good workmanship can be found, in urban and rural projects, and these standards should be used as yardsticks for future work until revised “norms” can be issued and upheld.

3.2.8 Payment proceduresThe payment of advances was customary prior to the conflict, although the advance was effectively the transfer of funds from one state department to another. The payment of advances is still considered a necessity, to permit the purchase of materials. State construction companies have indicated advances in the order of 30%, whilst private companies have confirmed that they require advances of between 10-15% of the total project value. The primary reasons given are the


lack of a capital base to commence works, the lack of readily available, affordable credit, and the common practice of the state to provide advances. Credit can be obtained, although a loan with a monthly interest rate of 4.6% was described by the private contractor who had taken the credit as being terms “better than most”. The advance payments were generally liquidated through regular deductions from further payments or, more commonly, never liquidated but subtracted from the final lump sum payment made on completion of the project.

Valuations of work done were in theory carried out jointly by the contractor and a representative of the investor using the ubiquitous “Form #2” on a trade by trade basis. As elsewhere in Eastern Europe, contractors effectively dictated the pace of repayment with little reference to the actual quantity of work done and certainly without reference to the quantity of work done in accordance with the standards required under the contract and the “norms”.

Regional experience has also indicated that the requirement for advances is common practice, with little reference to alternative business arrangements. An alternative approach that has been increasingly accepted elsewhere in the region is the avoidance of advances, but the assurances of regular interim payments in arrears, with an increased frequency in the first month of the project. This is a useful indicator of the credit-worthiness of a contractor in the eyes of the local banks and the local suppliers.

3.2.9 Completion and handoverAt completion, a formal commission was to be constituted to carry out a technical inspection, including representatives of the utilities, the government engineers, and the end-users of the building. It was expected that defects noted during this inspection were to be made good by the contractor.

3.2.10 Defects liability, future making good and maintenanceThe construction methodology used did permit the witholding of a percentage of the balance due to a contractor, pending the final technical inspection. In some cases, this was extended to cover a period of time following completion, typically through the extremes of the weather pattern. This is standard practice in the US and Western Europe, but was rarely enforced in this region. Retention in the order of 5% was described as being reasonable, and all of the contractors discussed viewed this as both reasonable and professional. It is also customary for the contractor to owe a “duty of care” for defects arising, although few contractors are forced to meet this obligation. The future maintenance and further making good of defects was rarely planned. Indeed, in Albania, a separate project activity within an EU Phare-funded new-build housing project was the establishment of an appropriate housing association or condominium to take on this role in the absence of any official mechanism.


4. Recommendations

4.1 Scope of workSite visits to villages in 4 districts have clarified the works carried out by the government and other donors, and the outstanding level of need. To meet these varying needs in terms of shelter rehabilitation, four typical scopes of work have been defined. Note that for each dwelling, a minimum level of accommodation of two rooms for families <4 persons, three rooms for families >4 persons, a kitchen area and washing area is to be provided, with all necessary water, sanitary and electrical connections, as previously existed.

Type Title DetailType A Finishing works Internal plastering, additional joinery, additional glazing,

ceiling and flooring works where required, water and electrical installations as required in the rooms to be repaired, internal painting in the repaired rooms

Type B Additional rebuilding works

Reconstruction of additional accommodation(kitchen or bathrooms), plus works as in Type A

Type C Major rebuilding works Reconstruction of main structural walls as necessary, new roof structure and enclosure, plus works as Type A

Type D New build Design and construction of a new house on a new site, to include the minimum space provision

Type A schemes, “Finishing works”, are to complement the works carried out by the government and other donors, and to make these houses fully habitable. This approach has been discussed and agreed with the Minister for Social Welfare.

Type B schemes, “Additional rebuilding works”, are also to complement previous works, primarily houses in more urbanised villages that had had internal kitchen and washing facilities.

Type C schemes, “Major rebuilding works”, are to focus on houses that have been burnt, shelled or damaged by explosive charges, but where a significant percentage of the main external walls are still structurally sound.

Type D schemes, “New build”, are for families whose homes are in occupied territory are deemed by the government to be refugees; families whose homes are damaged beyond repair and where relocation to a new site on their own land is economically more viable than repair; and families who have lost family members, are classified by the government as priority cases, and require new houses due to the changing family sizes and structures. For this latter case, only families who have been included by the government in its “one floor self build, one floor government build”, will be considered. For all Type D schemes, clarification of land ownership is required as well as the standard requirement for proof of property ownership.


4.2 Selection of target villages - “cluster areas”Given the extensive geographical spread of the target villages identified by the government, potential villages have been grouped in “cluster areas”, loosely defined by the topography and the natural grouping dictated by access. Cluster Area 1 consists of the villages listed below in Askeran District; Cluster Area 2 consists of the village of Karmir Shuka(Krasni Bazar) in Martuni District and the villages listed below in Hadrut District; Cluster Area 3 consists of the two villages listed below in Martakert District. The numbers of potential housing units eligible for repair are based on inspections of several typical houses in each type as appropriate, extrapolated according to local records. The totals in each village are subject to verification. Exact numbers of eligible beneficiaries in each village is are also subject to verification in accordance with the eligibility criteria as discussed in 4.5.

District Village Type A & B Type C & D

Askeran Nachijevanik 10Aranzamin 7Sarnaghbyur 15 6Dharaz 11Khramort 75 13

Subtotal 105 30

Martuni Karmir Shuka (Krasni Bazar) 6 3Subtotal 6 3

Hadrut Drahtik 1Azokh 1Togh 14 4

Subtotal 16 4

Martakert Mataghis 45Talish 26 50

Subtotal 71 50

TOTAL 198 114

4.3 Phasing of the worksWith target villages and potential beneficiary lists still to be finally agreed, a newly-formed implementation team, and major issues over the supply and sourcing of materials to be addressed with the government, it is recommended that work is phased between each cluster area. Dependent on the approval of beneficiary lists and the availability of contracted teams to carry out construction assessments (see 4.7), works should initially commence in Cluster Area 1, with works in Cluster Area 3 being commenced approximately four weeks later, and works in Cluster Area 2 four weeks later still. This will enable the experience gained in the start-up of Cluster Area 1 to be usefully deployed, perhaps even involving key CWG members from one area to advise the local community in a new area of the process. It will also ensure that project resources can be used more efficiently, and prevent overload and the inevitable problems and lowering of standards. This timetable would ensure that the project was launched in all Cluster Areas prior to the onset of harshest months of winter, and permit the final assessments for the final Cluster Area


to be completed in these months. This is an optimum programme, and it may be more realistic to focus on only commencing work in one Cluster Area in 1998. It should also be noted that due to the local climate, the winter months in Nagorno-Karabakh are not as extreme as in Armenia. Some high elevations In Nagorno-Karabakh, including Talish, failed to receive snow at village level at all during the winter of 1997-98. Therefore, it is hoped that some site works, excluding the casting of concrete and mortar works, will continue during the winter months. Due to concerns over the quality of building materials and construction methods, it is not considered advisable to use additives and other techniques available for building in low temperatures.

4.4 Establishment of Community Working Groups - CWG mechanismIn each village, in each cluster area, Community Working Groups should be formed in accordance with CRS experience in Armenia. Discussions with village mayors indicate a high level of involvement in previous schemes, and this experience is invaluable. Other key individuals in the villages, in particular school directors, teachers and skilled craftsmen, could also valuably contribute to the process. Potential beneficiaries, especially those who have had poor experience with previous schemes, could also be involved in an informed way. And it should be noted that in many houses visited it was the women of the household who were most informed and most opinionated about the needs and the priorities. The CWGs should be formally constituted, with the roles of the local members and that of CRS being clearly defined. The CWG should be clearly empowered to oversee all aspects of the project in each respective village, including the following tasks: prioritising of the list of beneficiaries, and arranging for the signing of tripartite agreements and the provision of property and land ownership documents as required; advising on appropriate scopes of works for each house according to need; proposals for local contributions in labour and materials (with reference to eligible sources for those materials); advising on the availability of local labour, construction teams and contractors; overseeing the tender process, and sitting as a bid committee; informal monitoring on site during construction; liaison with beneficiaries during construction and the resolution of beneficiary-related issues. The CWG would also form the basis of the Commission that would undertake the final technical inspection, augmented by district governmental engineers. It should be stressed that CRS should be an integral part of the CWG, although the role of CRS includes monitoring compliance with donor agreements and the use of a veto where compliance with donor, CRS or other regulatory authorities becomes an issue.

4.5 Selection of beneficiariesAccording to the Minister for Social Welfare, the government has a monthly-updated record of all priority cases throughout Nagorno-Karabakh. The provisional list prepared by the CWGs should be ratified by the Ministry, to prevent duplication of effort and to minimise discrepancies in criteria. The Minister has confirmed that social cases should be assisted as well as “war hero/victim” families. Should the Ministry adopt a more critical and interventionist stance, a clear set of criteria should be established, with reference to the works carried out, the need to include social cases and to assist the reformation of community groups, and the pragmatic limitations that necessitate the “cluster area” approach. The ratified list should then be prioritised by the CWGs, pending progress on detailed construction assessments and real costings through tender and local contributions. Letters of Intent should be signed with the initial beneficiaries based on preliminary cost assessments, to determine which house should be assessed in detail.

4.6 “Hybrid” self-help approach and local contributionsThe practical limitations on the possible community contributions have been addressed elsewhere in this assessment. This should be dealt with on a village by village basis, with the incentive being that the scope of works to the village could be increased commensurate with the extent of the local contribution. On an individual basis, one approach that has had a degree of success as


developed and implemented by CRS in Bosnia-Herzegovina is a direct self-build “incentive” scheme. This approach takes the fully contracted value of the minimum level of accommodation, and offers each beneficiary the opportunity to undertake one of more trades with materials provided by the contractor. An agreement specifying this work, the standards required and the time period is signed, and for this period, dependent on the work, the contractor temporarily leaves the site. If the beneficiary has successfully completed the work in time and to an acceptable standard, the contractor resumes work and the beneficiary receives additional building materials of his choice to the market value of the labour he/she has provided. If the beneficiary fails to undertake the work or to finish within the period agreed, the contractor resumes work, carries out the particular trade or trades, and the beneficiary does not receive any additional material. This approach guarantees that the minimum level of accommodation will be provided, but also allows beneficiaries who clearly do have building skills to actively participate in the reconstruction of their house. This does not result in any financial benefit to the donor, but does increase the level of local “ownership” in the project process. It should also be noted that any beneficiaries interested in participating in the self-build “incentive” scheme must be vetted by the CWG to prevent unnecessary disruption and inconvenience to the contractor. To summarise, this issue should rightly be decided by the CWG, with reference to CRS subgrant compliance issues.

4.7 Preparation of construction assessmentsFollowing agreement on a provisional list of beneficiaries, detailed construction assessments can be carried out. A written scope of works plus a sketch plan indicating the rooms to be repaired should be agreed for each house, based on the house types, the situation on site, and the specific needs of each family. Each scope of works should be ratified by the CWG. Although the construction assessments should ideally be carried out in-house, given the workload it is recommended that this work is contracted out under tight supervision. An open tender process should therefore be held for the provision of this service; both state departments and private individuals or companies may be interested, but to maintain consistency and to minimise CRS management oversight it is recommended that one company be awarded the work per each Cluster Area. A standard assessment form has been developed that requires only minor modification. This can be provided on disc to simplify the checking process by CRS and to permit the use of each assessment as part of the database for tracking work done and preparing valuations. These forms can be initially completed by hand, to await the establishment of the database and the appropriate staff.

4.8 Tripartite agreementsFollowing agreement on a provisional list of beneficiaries, and the completion of detailed construction assessments, tripartite agreements can be signed between the beneficiary, the local authority and CRS. This details the obligations of each party, including a clause regarding the release of any other temporary accommodation held and the immediate limitations on the sale or rent of the property within a defined period of time. It also obliges the municipality to ensure that there is no duplication between this scheme and the benefits of any other assistance programme.

4.9 Selection of contractorsThe Ministry of Urban Development has provided a list of 44 potential contractors throughout Nagorno-Karabakh, both state and private (see 2.5). Further potential contractors should be solicited through newspaper, radio and television adverts, and as nominated by the CWGs. Background information should be obtained where possible from each of the contractors to enable short-lists for each Cluster Area to be determined. Structured interviews should then be carried out with each contractor, to ascertain the final tender list. Factors to be considered include: is the company legally registered, or in accordance with current legislation; has the company experience of traditional building construction; has the company directors with


appropriate construction engineering qualifications and experience; does the company have the directorial capacity to manage a contract within this programme; does the company have the minimal equipment and vehicles to undertake such project; is the location of the project a problem given the main office base; readiness to accept modified construction administration procedures; access to capital or credit, and ability to work without an advance; readiness to work with local construction teams as appropriate and to accommodate contributory labour or the self-build incentive scheme; and good references.

4.10 Subcontractors, local construction teams and contributory labourSmaller companies, local construction teams and contributory labour should be assessed as above, with a view to a role as a subcontractor. The professional requirements, experience and capacity are as 4.9. The subcontractors and local construction teams must also be prepared to enter into agreements with the main contractor, and accept working practices as structured within the main building contract. The final selection and appointment of subcontractors is the responsibility of the main contractor, although CRS has the right to nominate subcontractors and accept the responsibility of the potential impact of such an appointment on the overall works. This method would be used to include contributory labour, to be managed alongside the main building contracts. It is preferable to have one main contractor responsible for overall progress, but through structuring the work the use of nominate subcontractors (smaller companies, local construction teams, contributory labour) can be utilised independently of the main contractor(s). See also 4.12 and the promotion of local producers of building materials and construction elements.

4.11 Tender processFollowing agreement on a list of contractors for each tender, based on the Cluster Areas, tender packages can be prepared consisting of a formal letter of invitation, a tender declaration form, a copy of the scope of works and detailed construction assessments for each house as checked by CRS, and a copy of the proposed form of contract. The tender declaration form commits the contractor to confirming that he/she has checked all of the quantities, has amended them accordingly, and is thereby confirming that the scope of works will be achieved for the price offered, irrespective of the final quantities. The contractor also has the opportunity of requesting clarification of any issues, particularly with regard to the form of contract and the control of the works. Any works that the contractor considers to have been omitted can also be submitted as a separate cost for discussion. A minimum period of two weeks should be allocated for tender preparation, and a fixed deadline strictly adhered to. Formal tender opening should be carried out in the presence of the CWG, although detailed analysis of the tender returns for errors, inconsistencies and omissions should be carried out by CRS. This analysis, in a tabular format, should then be re-presented to the CWG with a recommendation based on the interviews and the tender. Dependent on the number of houses, each contract should ideally be restricted to a maximum of 30 houses. In any one Cluster Area, the allocation of houses should be based on a combination of proximity and the individual house cost.

4.12 Materials and suppliersThe issue of sourcing materials is subject to further discussion. Two major problems must be faced; firstly, the current sourcing of finishing materials in Iran, and secondly the sourcing of raw materials, in particular masonry blocks, in abandoned Azeri settlements. The first problem can be addressed through alternative sources, although this will lead to higher costs. The second problem will probably have to be raised with the government, if only to encourage the re-opening of the existing quarries.


Other issues for consideration are establishment of local producers for lime and reinforced concrete lintels. This is an opportunity to both solve a specific need, but also to promote income generating opportunities that can extend beyond the life of the programme. Lime production requires the identification of local specialists who have the skill and knowledge to instigate such an operation. Proximity to sources of appropriate limestone is also essential, and no investigation has been carried out into this as yet. Regarding the production of pre-cast reinforced concrete lintels, this directly addresses the problem of the poor quality of the factory-made items and the existing shortage of supply. This can be established with the minimum requirements of experience, provided a simple design can be adhered to an good supervision is maintained. Both initiatives would require some start-up capital in the form of a small advance payment for the products. In areas where timber mills have been established, it is hoped that the price and quality of the materials will be acceptable. Opportunities exist for providing technical guidance if quality is an issue. All the above are constructive ways in which the local community can not only contribute to the project but achieve some longer-term benefits.

4.13 Form of contractRegional experience has shown that a more contemporary framework document than the standard state version can satisfy the requirements of both parties, and provide a useful, practical tool for use during the construction process rather than simply as a commitment for payment by the investor to the contractor. This framework document includes a methodology for agreeing appropriate building standards; a mechanism for dealing with unforeseen works, both in terms of the contract period and the cost of the works; a process for amending the works, in both quantity and quality; a mutually agreeable valuation and payment process, to permit more frequent payments than customary, to the benefit of the contractor’s cashflow; a definition of completion and handover, and a defects liability period with a financial retention; and a process for terminating the contract by either side, and the responsibilities of doing so. It effectively establishes a simple but fixed mechanism to control the works on site and hence the financial commitment of the investor, through a written instruction, certification, valuation and payment process. This has been developed from standard forms of contract from the UK, modified over 5 years use in Albania and Bosnia-Herzegovina, and further amended for use in Nagorno-Karabakh. It should be note that this form of contract has been used to implement grants from USAID, PRM, UNHCR, EU Phare, and other European governments.

Note that although versions of the proposed main contract and a contract for minor works or the engagement of nominated subcontactors have been attached, these may be subject to further modification. The corresponding contract documents defined by the contracts will also require modification, and have not been attached. The contract administration procedure will require formal introduction to the project teams prior to the commencement of works on site.

4.14 Control of work - site supervisionThe control of the work is exercised by the written instruction, certification and valuation process defined in the contract. This ensures that there is limited opportunity for confusion as to what should or should have not been done, as only works formally instructed will be valued for payment if they are to the standard as laid down in the contract. This initially appears unnecessarily bureaucratic, but it is to the benefit of the contractor as a clear paper trial is established for the life of the project to support final valuations and monies due. It also prevents the contractor attempting to modify the projects on site, as they do so at their own risk. The mechanism does enable the contract to carry out emergency work at his own discretion without a written instruction, which can be covered by a later instruction, but it encourages the use of good judgement. It also requires the frequent presence of the CRS engineers on site to assist the


contractor, although given the concern over building standards and quality of workmanship this is a already a requirement. The involvement of nominated subcontractors and local contributory labour will also require good site organisation and the phasing of works, although such works should be structured as independently as possible. The contractor will be required to nominate one contact person who should be readily available, and regular meetings with the technical director will also encourage the work to be viewed as a partnership where issues are resolved to the mutual benefit of contractor and CRS.

Works may only be carried out on receipt of a written Instruction from CRS. Although the contract has listed a scope of work in the form of a number of houses, work on each house may only commence when instructed. This is, for example, to enable works on houses over which ownership issues may need to be resolved or for which a tripartite has yet to be signed to be delayed. The Instruction may also formally modify a detail in one house, amend a quantity, or specify a change in the working practices. The instruction mechanism also reserves the right for CRS to temporarily suspend all works in the event of unforeseen events, albeit being liable for all commitments by the contractor under previous instructions.

Regarding disruption in the works due to factors beyond the control of the contractor, or the additional or work by CRS through the instruction process, an extension of time can be mutually agreed and issues accordingly.

4.15 Building standardsThe need to achieve high building standards has been addressed above, in the light of the numerous examples of substandard work. The contract requires the contractor to undertake a sample piece of work of each trade prior to that trade commencing to agree appropriate standards on site. The sample piece approved can thus be used as a reference by all site supervisors and the labourers themselves, to avoid the errors and misunderstandings caused through oral communication. These sample pieces are to be retained for the life of the project, to act as a point of reference by the final technical inspection team.

Copies of the “norms” will also be obtained if possible, to determine the local technical requirements of, for example, the tolerances for mortar joints, the maximum and minimum thickness of plaster using the local materials, and the requirements for ventilation under floor voids.

4.16 Payment proceduresFor valuing work done, contractors will continue to use “Form 2” to advise CRS of the quantity of work done, and this will be used as a check list for CRS to produce a Certificate of Valuation based on the original cost assessment agreed following the tender process. This Certificate of Valuation is a running document detailing the contract quantities and the quantities valued to date, a well as the unit costs agreed at tender. This discourages the contractor from attempting to carry out additional quantities of work on the understanding that this excess will automatically be paid.

The sum payable in accordance with the Certificate of Valuation is added to a Certificate of Payment, which lists the total value of work valued to date and the current amount payable, less 5% retention. On the formal acceptance of the works, following the technical inspection, a Certificate of Practical Completion is issued that releases 2.5% of the overall contract sum retained and formally commences the defects liability period.


4.17 Financial penaltiesStandard contracting practices in theory include financial penalties for non-completion of the works by the contract deadline, including any extensions of time issued. This should be a fixed figure per day, in the region of 0.2% of the value of the contract per day, to a minimum of $200 per day. This encourages realistic contract periods during tender, and a responsive attitude on site.

4.18 Defects liabilityA minimum of two weeks prior to completion, a snagging inspection should be carried out by CRS accompanied by the contractor to identify outstanding works and works that need to be made good or replaced. Following acceptance at the technical inspection and the issue of a Certificate of Practical Completion, the Defects Liability Period commences. This should ideally be one calendar year, to ensure that the effects of all saesonal weather patterns can be assessed. This may have to be modified to accommodate the grant limitations and closure. Prior to the end of this period, another technical inspection is held, and defects in materials or workmanship should be made good by the contractor. At the end of this period, if all defects have been made good, a Final Certificate is issued and the remaining 2.5% of the overall contract sum payable is released.


4.19 School rehabilitation worksPotential school rehabilitation projects were assessed during the village visits. Many of the schools in the villages visited have been repaired by the government or by diaspora funds, or partially repaired to accommodate the current reduced population. The list below is indicative only, and is dependent on further investigation and discussions with the Ministry of Education.

Location DetailKhramort,Askeran District

Main school building heavily damaged, partially repaired by diaspora funds, sufficient for current needs.Sports hall, to serve whole community including nearby settlements, could be repaired.Works would involve repairs to the main wall and the re-erection of a steel roof frame, roof repairs, glazing and joinery repairs, wall and floor finishes. Optional additional works could include total renovation of adjacent changing rooms, toilet and shower facilities, and temporarily sealing off this repaired wing from the remainder of the building.

Talish,Martakert District

Part of school refurbished by diaspora funds, remainder of building sealed off. Works could include additional making good or the provision of furniture. Alternatively, new furniture could be commissioned locally, utilising the local timber mill and craftsmen.Sports hall need major repair as in Khramort, but demand is currently limited.

Mataghis,Martakert District

Kindergarten repaired by government funds, to replace existing school commandeered by the army. Works could include additional making good or the provision of furniture. Alternatively, new furniture could be commissioned from Talish, utilising the local timber mill and craftsmen.

4.20 Water system rehabilitation worksPotential works to improve or upgrade water supply systems were also assessed during the village visits. Water is a problem throughout the districts visited - in some villages, water systems had been repaired by ICRC. In others, pre-conflict shortages had become more acute with the loss of pumps, lack of electricity to power pumps, and shifting demographics leading to water supplies becoming contaminated. Preliminary discussions were held with MSF-Belgium in Yerevan and Stepanakert to attempt to co-ordinate shelter and water rehabilitation works to maximise the benefits in any given community. However, by the end of this assessment visit, MSF-Belgium had yet to commence extensive work in the field and were discussing priorities with governmental bodies. The proposals for consideration below have also been passed on to MSF-Belgium for their comment and further exploration.

Location Detail


Khramort,Askeran District

ICRC had carried out initial repairs to the existing supply to elevate storage tanks. Due to the low flow rate, a new source 1.5km away is under consideration. A religious order has been working for one year to raise funding for such a scheme. CRS will investigate the work to date and review a possible collaboration or direct implementation.

Talish,Martakert District

The quantity of water is a major problem, with water currently only being provided once in four days. The nearest new spring is 25km away, although a scheme has been drafted to drill and artesian well near the village. This has been approved by the government, and is awaiting funding.

Mataghis,Martakert District

The current water supply is of poor quality an insufficient quantity. Inhabitants are using river water drawn from away form the village, but this is itself contaminated by a local army base. Two springs, 1.5km and 3/4km away, offer alternatives.

4.21 Disposal of asbestos sheetingThe disposal of such materials in the US and Western Europe is subject to strict controls; only authorised companies can carry out such work, protective clothing and breathing apparatus should be used at all times, and the area to be worked on should be sealed and dampened. In the absence of local government regulations, a modified version of the above could be adopted. Protective clothing should be worn, including breathing masks; the area to be worked on should be dampened and sealed where possible; cutting and working of the material should be minimised or avoided; the material removed should be sealed in plastic, buried in a remote location and the authorities notified.

4.22 StaffingBased on the “Cluster Area” approach, it is recommended that one Field Monitor be allocated to each cluster. This is an increase on the staffing levels in the proposal, but reflects the geographical distribution of the priority visits following the assessment visits. Frequent site presence is required, with all houses underway being visited at least once a week. Due to phasing of the clusters, this will require the employment of one Field Monitor in addition to the one specified in the budget. The Project Officer/Engineer must provide adequate support in the field to the Monitors, and be on hand to resolve specific technical raised. Valuations will be carried out by the Field Monitors supported by the Project Officer. The national Project Manager will deal with the main contract administration, under the direction of the expatriate Programme Manager, and maintain the assessment database. However, the Project Officer and the Field Monitors should be encouraged to familiarise themselves with the database to improve the efficiency of processing the valuations and payments. Dependent on the response from the Ministry of Social Welfare in agreeing the provisional list of target beneficiaries, the additional Field Monitor could be engaged immediately to ensure reduce the repetition in training.

5. Proposed implementation plan

5.1 Project activities


The following activities, although focusing on shelter repair, also include the further investigation into complementary school and water system rehabilitation. Procedures up to and including the commencement on site are included. Further procedures are as per Annex C of the Main Proposal.

Potential target villages are agreed with the Ministry of Social Welfare based on the assessment visits.

Community Working Groups (CWGs) are established in the target villages, although progress on developing the project in each village is dependent on the phasing of each “cluster area”. Protocols defining the roles and responsibilities of all members, including CRS, are signed.

The CWGs prepare priority lists of beneficiaries, and outline scopes of work for each house identified in conjunction with CRS engineers.

This priority lists of beneficiaries are agreed with the Ministry of Social Welfare, to prevent duplication of assistance. Note that the Minister has already agreed in principle to include social cases other than those families who have lost heads of households. The CWGs arrange for the signing of letters of intent by the families on the list.

An advertisement is placed in newspapers, radio and television, to solicit interest from companies to carry out detailed construction assessments, and structured interviews held. A brief is prepared, outlining the scope of work for the assessments, the geographical distribution, and including the standard assessment for to be used. The works are to be separated into the three “cluster areas”.

Contracts for the carrying out of the assessments are signed, with a technical brief and sketch schemes being provided for each house. Assessments are to be checked by CRS engineers during the work and on completion.

With reference to the scope of works prepared for each individual house, the CWGs arrange for the signing of tripartite agreements by the beneficiaries, the local authorities and CRS.

The CWGs are to explore the level of local contribution possible, and local participation through materials production or local construction teams.

Advertisements are placed in newspapers, radio and television to solicit interest from construction companies, subcontractors and local construction teams. Structured interviews are held with companies nominated by the Ministry of Urban Development, those responding the advertisement, and to those nominated by the CWGs.

Project programmes in each cluster area and specifically in each village are developed based on the scope of work and the level and type of local participation. Letters of Intent are signed for the provision of contributory labour as appropriate, and with nominated subcontractors and suppliers following negotiation through the CWGs.

Short-lists of main contractors are agreed by the CWGs for inclusion in the tender process. Tender packages are to be prepared by CRS. Formal tender opening is to be carried out in the presence of CWG representatives (by village, or by “cluster area”, as appropriate), analysis of the tenders undertaken by CRS, and final decision-making and ratification by CWG representatives. This will involve the subdivision of any one “cluster area” project between two or more main contractors.

A detailed programme of work is negotiated with the main contractor and representatives of the nominated subcontractors, local construction teams and the CWGs. This is to ensure that all participants are fully informed as to the roles of the others, and the construction management mechanisms to be used to CRS.

Contracts are signed with the main contractor, the nominated subcontractors, local construction teams are individuals as appropriate. Dependent on the signing of tripartite agreements, instructions to commence are issued and works start on site.


Sample pieces of work are carried out by the various trades, and standards of workmanship and materials agreed.

Initial site monitoring is undertaken by CRS engineers. Dependent on the final agreements reached over payment procedures, advance payments

or initial payments for work done or the purchase of materials are made.

5.2 Proposed project timetableThe following timetable is based on works in one “cluster area”. As per 4.3, works will be phased between “cluster areas”, although initial agreements on target villages and the establishment of Community Working Groups can commence immediately dependent on resources.

WeeksActivitiesAgree potential villages X XEstablish CWGs X X XAgree beneficiary lists X XSign letters of intent X XSelect assessment team X X XConstruction assessments X X X XAgree contributions X XAgree scope of work X XContractor interviews X X X X XTender(incl. preparation) X X XContractor selection XContract signing XAgree overall programme XStart on site XAgree samples X XInitial payments X X


APPENDIX A

Summary of contacts and visits

CRS/Caucasus Water Rehabilitation Team. CRS/Caucasus PSP/School Rehabilitation Team. Norwegian Refugee Council - School Rehabilitation Project, refugee settlement, Ranchpar,

Ararat District, Armenia. Oxfam Armenia Construction Engineering Team. CRS/Caucasus - Water Rehabilitation Project, Aygut, Gegharkunik District, Armenia. CRS/Caucasus - School Rehabilitation Project, Aygut, Gegharkunik District, Armenia. CRS/Caucasus - School Rehabilitation Project, Dprabak, Gegharkunik District, Armenia. Norwegian Refugee Council - New housing, refugee settlement, Arzni, Yerevan, Armenia. MSF-Belgium, Yerevan, Armenia and Stepanakert, Nagorno-Karabakh. Minister of Social Welfare, Stepanakert, Nagorno-Karabakh Head of Construction Department, Ministry of Urban Development, Stepanakert, Nagorno-

Karabakh. Department of Social Development, Stepanakert, Nagorno-Karabakh. Site visits to villages in the districts of Askeran, Martuni, Hadrut and Martakert, Nagorno-

Karabakh (see 4.2). Includes refugee settlements, and locations of shelter and infrastructure rehabilitation works by the government, diaspora foundations, and ICRC.

State and private contractors in Yerevan, Armenia, and Stepanakert, Nagorno-Karabakh.


shelter and infrastructure rehabilitation project nagorno-karabakh

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