Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 24018

IMPLEMENTATION COMPLETION REPORT(IDA-.; IwUU)

ON A

CREDiT

IN THE AMO-UNT OF SDR 29.7 MILLION (USS40.O MILLION EQUPIVALENT)

TO THE

REPUBLIC OF KENYA

FOR THE

EL NINO EZM,KRGNe CY PRKOJCT

June 24, 2002

Water and Urban 1East and Southern AfricaAfrica Region

Ts document has a restricted distribution and may be used by recipients only in the performance of theirIofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective Yearly Averages as Noted Below)

Currency Unit = Kenya Shilling (KSh)STR I = US9 1.27 (2001)

1.32 (2000)1.37 (10001

1.36 (1998)

US$ 1 = 78.56 KSh (2001)76. 1 A T h (200)I -.. ._. P-0,

70.27 KSh (1999)60.4n TKCh (1998)

FITCrAT VF.AR

July 1 June 30

ABBREVIATIONS AND ACRONYMS

AfDB African Development BankAflF African Develonment FundAFD Agence Francaise de DevelopmentFNFP F.l Ninn mme Pneprnvient

ERL Emergency Recovery Loan / Credit-OK Gornvmexnt of Kenya

IDA International Development AssociationKUJTIP Kenya U rbain Transport Tnlfratr,nc.tlre Prnoet-tMOP Manual of Procedures

PSC Project Steering CommitteepDvSTAT 7.oJc MraenT T-,+I Lvi t.J W 'J.s UI1

5.U . -LtI

QAG Quality Assurance Group%AIXrJIVIE miUaAI~ IVIaniila14h1U I' UVI A IVI -unUU

TOR Terms of Reference~TU Teli; T aT-'

Vice Presidntit Callistn Mqdnvn

Country Director: Makhtar DiopStorJ MzrerIretr £1a

5.......II IJI AJI rLocussl J Jsu33.JJ / PrI;1LJ I PatelI I

Task Team Leader: Lance Morrell

FOR OFFICAL USE ONLY

KENYAFT, NINO EMERGENCY PRO.JF.CT

CONTENTS

Page No.I. rIuJsL Uram j

2. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry i4. Achievement of Objective and Outputs 65. Major Factors Affecting Implementation and Outcome 86. Sustainability 107. Bank and Borrower Performance 108. Lessons Learned 149. Partner Comments 17i0. Additinnal Infnrmation 18

Annex 1. Key Performance Indicators/Log Frame Matrix 19A ---- '. Prec Costs -- F.ancrg2FULZICK L. I 10M% ES MGI I 1MICi1KR11r

Annex 3. Economic Costs and Benefits 23Annex 4. Bank inputs 24Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26Annex 6. Ratings of Bank and Borrower Performance 27Annex 7. List of Supporting Documents 28Annex 8. Outputs --- Contract Details 29Annex 9. Project Costs for AfDF and AFD Financing 34Annex 10. Accelerated Procurement Processing Analysis 36Anntx 11 RorrowiesR Cnntrihiutinn tn Tr.R 37

Map IBRD29632

This document has a restricted distribution and may be used by recipients only inthe performance of their oMicial duties. Its contents may not be otherwise disclosedwithout World Bank authorization.

| Project ID: P056595 |Project Name:, EL NINO EMERGENCY PROJECT

I eam Leaaer; lcle;r Miol.uHTI IIr, unu. ,IrzuI

ICR Type: Core ICR JReport Date: June 24, 2002

1. Project Data

Name: EL NINO EMERGENCY PROJECT L/C/TF Number: IDA-31200

Sector/subsector: UY - Other Urban Development

KEY DATES

PCD: 03/27/1998 Effective: 10/23/1998 10/23/1998Appr.;sl:. n3.n0ioo9 AM11TR:

Approval: 07/16/1998 Closing: 12/31/2000 12/31/2001

Borrower/lmplementing Agency: Government of Kenya/Office of the PresidentOther Par. African Developm..ent BJ5-Ful- f4.. Ager.ee A- IA F s e nAFD

as parallel financing partners.

STAFF Current At AppraisalY.ce Pr-esi;dent: Ca!!isto E. M.Ada,Z Ca!!isto E. Madavo

Country Manager: Makhtar Diop Harold E. WackmanSector Mlanage.-r: Alain Locusso! (ActAig) Je fAy S. -Vcki

Team Leader at ICR: Lance A. Morrell Michael Gillette

ICR P."ma'-y Au,thor: joSpnli A. r A4kA Tonres Kar-ir;

Lu Kang

2. Principal Performance Ratings

(HS=Highly Sabsfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

SRutainahiliti . L

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAr. (if avai,.'e ICRQuality at Entry: S

PrAie't nt RPicl nt A.". -T.ima YVes

3. Assessment of Development Obiective and Design; and of QOality at Entry

3.1 Original Objective:The following is the development objective as taken exactly trom the Memorandum and Recommendation

of the President of the Intemational Development Association to the Executive Directors, June 9, 1998.

The project would support the Government's ongoing efforts to mitigate the serious effects offlooding

attributed to the El Nino phenomenon. The project aims to minimize.life threatening condition in 23&IIU(4I~ ~ ; -# ' _fV'_- -4&4 U5Z A D_ _ _VIjiL, ' ... I L ., JI ) S. .3iWiI U .. -L~ J &I.L J' -- :-..-1~A.. ~ Fi,r,pated" d.:s. .;c_ of Ke-,ya a,.dthers Prov,r',.ce of 1V"'airb by restori,-g "a rs"t much ofthpre-vio/.3Yusly xs£rg

potable water supply and health facilities as possible, and to facilitate reprise of ecbnomic activityiIroUghs fhec res)to, .&&u's oJ i'y roUtes 1 in1to cu4t oJJ Ureuas. It wuldu Salu try, wLiLthin thie fmeUlans aVUSLUale, tU

save afew economic assets in danger of total collapse (e.g. bridges). In addition, the project woulddem,onsLae ,-LaeseamrLL'IZlneduUprocurer,.erntando5 u o,therr ranageri-l'-u iechniilq-ue l-whiul d be u iu mure uruuudyapplied within the GOK administration.

3.2 Revised Objective:

(GOK) came back to IDA with requests to support repair and rehabilitation efforts in an additional 12LiUSUiVLO. I IUa WZS Wac L(A u by UJ LI'LsF LmIiiaiCa-IL anag ULr. VUJ%,%,LI V% %AIa.UUU UoUy iLr ilCai.L11 LU u1i

geographic areas of focus. The sectors for intervention remained as urban and rural roads, water supply,aU heu< laWLmuU. IIISV LVV1OVU dUJVIecUve was uauzmu al loiUiw:.

I nu prujoci wuul s.uppurt inc LGUVernmeni's orgoirLg qJJUrls io i=1gUie Lfe sericus cejjcis offj'ooing

attributed to the El Nino phenomenon. The project aimed to: (i) minimize life threatening condition inse J!s~ f:_ L_. _ _rv _ _ _ s _ ^ _ - __ … rc _L * L_ _ -_ _ __ -L_ . _-__ _ _ Z _ J -_ . 1J impactuc-u Uisrt-iuis ojCVenyu uanus mne r-ruvince oJ iwutruui uy reswurng pusuoe wuter supply and nealth

facilities; (ii) facilitate improved economic activity through the restoration of key routes badly damagedduring tne El Nvina storms; and (iii) demonstraie streamlined procurement and oiner managerialtechniques which could be more broadly applied within the Government administration.

3.3 Original Components:AI. uIAs tA__C-;- A;--.>;-. -YLUL fI'NV -UA LISA-A ;--.-+-A UA US'.. SI *A P-UtA.- AU. JJA1_A-___

to the project were agreed upon:

(i) Emergency Rehabilitation Infrastructure:

* Civil works and goods contracts for (i) rural roads and bridges, (ii) water supply, (iii)hea.lth fhnfitities- 93 civil works contracts and 2 goods contracts (see Annex No. 8 for details of all

* Engineefrnng =ons ming ser3nices for desi,0 1 . eand c-.nn-ction. cu-. cn to over toe 95World Bank civil works and goods contracts and the 26 AfDF civil works and goods

-- 6 consultant services contracts.

* Audit consulting services for financial and technical audits.-- I consultant services contract.

* Monitoring and Evaluation- 3 Ci.~JMiulii(.y ss-vI1LV toru11L5LL.

* Operating costs for the Project Management Unit - individuals recruited from the privatesector to staff the PMU-- 3 consultant services contracts.

The project was exempted from all taxes and duties under special legislation enacted by the Government of

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Kenya. At the time of the El Nino storm events in 1997/1998, the macroeconomic situation of the countrywas stressed so the Credit was approved by the Board with 100% IDA financing for the above components.All engineering costs for design, preparation of the bidding documents, evaluation of the bids, andsupervision of construction for the IDA financed works (95 contracts from this credit) and the 26 AfricanDevelopment Bank contracts were financed from the El Nino Emergency Credit.

Under OP 8.50 - Emergency Recovery Assistance, paragraph 3(b) states that "restructuring of the Bank'sexisting portfolio for the country, to support recovery activities" should be considered before or at the sametime as an Emergency Recoverv Loan (ERL). The Urban Transport Infrastructure Proiect (Credit No.281 1-KE) became effective on June 27, 1996 and was scheduled to close on June 30, 2003. The Credit ofUS$ 115 million was intended to rehabilitate urban road networks in 26 towns throughout Kenya. As aresult of the El Nino storm events and the damage to urban roads throughout the country, US$ 37.5 millionof the KUTTTP credit was reallocated to finance 8 civil works contracts: consultant services: and'oneratingcosts in three newly established categories under Credit No. 281 1-KE. This financing focused'on the repairand rehahilitation of flAo damaaed roads in 6 lurban centers most heavily hit hy the flood damacre

Annex No. R lists the details of 93 civil wnrks and two roodq contractts inndter the El Wino Pmeoenc_v

Credit (Cr. 3120-KE) and the 8 civil works under the El Nino Emergency component of the UrbanTrancnort irnfimtinnhir Proje-t (C!r ?R1 TCF1 TUinder th-ese their were. (i) 2n3 mrral roads nd b.ridioe

civil works contracts; (ii) 25 water supply and sewerage civil works contracts and 2 goods contracts; (iii)45 hpalth facilities civil works contracts; anAd (iv) u itrban roads c ivi wor-k contractc

A oral 1-'el invpetmnpnt inAclroe waine 4anc,m1 hu the- A&fi4ctan T lnenlopnrt Thlund (IAfMM - the onft 1on

facility of the African Development Bank (AfDB)- addressing water supplies and rura roads repairs andrehabilita.fion. UTnder this paraLlel fin-ancing TJS$ 15 million equi"aieat), G0K was reqred to rnnt,1kntn

an additional US$ 2 million equivalent towards the project costs. The AfDF loan was approved onNKTover.br 12, 1002; sg.;- n To-r-, 10 1 000. I - -o n on S , -I19.n d '7 .- A closeA on

December 31, 2001. The original closing date was March 31, 2001, then extended to September 30, 2001,arA -11tr fa flbean 31, 21 . There.vere 26 r..L or ..,ara fIr -r-,...,,*n - 3A- e.-.

.At InU4JMJJ J.fl'% -lU. .1 K, A J I.v ZUK 1 weL . , fl.t vL lLlCjt tJllUat. 4fl5aULluLUtA UJALA UnJ ~ka L5f

operation, 11 rural roads and bridges contracts and 15 water supply contracts (13 civil works and 2 goods)AAeA - i_nt ,,V. 7 V, AA-I V Al- -A A> AA.

S11flWA fu. 7 jUlVi. I WU VC1L1MO ,aiU aUJUC iu Vr U S vqwpiiiuiIL Wlt WC jJLUtIVU 4u WV-S WUCUI LUIC

loan. As mentioned above,'all the engineering costs have been financed by the IDA Credit.

3.4 Revised Components:In October 2001. the Proiect Management Unit (PM!]') renuested that an additional US% 1.2 million ofuncommitted IDA Credit funds be permitted to be utilized for the execution of 15 additional contracts. Sixnf these conntract were in the water mrinnlv qectnr, and nine were for the health fsailities sertnr whinhbrought the total number of IDA financed civil works contracts up to 116. See Annex No. 8 for thecnntract detnils of these 15 cnntracts All works w-re cnrriMed out on these suppclempntnl contrasts on orbefore December 31, 2001 with the exception of two health facilities contracts of which one was 32%onmpleted a-nd the othe-r 0.5% omplete at th,e tims. of the Credit closing.

The A nence Francoise Ad- Developrm.nn intepAed an, agm,nent wiAth GO- m.Minh bear..e a-$fV+,;.v on J.l1 4A

2000 and scheduled to close on March 31, 2003, for the repair and rehabilitation of urban and rural roadsuA a,,tn oupplies. The- finonn.,nnt pckage cn,nnn.

40 32 nnnrnn#eo to'lir.g flnrn 10 28 llnn n.e UNA Jis

managing these contracts with a French/Kenyan Joint Venture consulting firm engaged to design the works,prer .-e k AAbdr A- a-l.n+¢, ev ae the bids .-A +znd t o s e+-e-t. C_ An-ex XTo. 0 frt

eJ%JA L JtWA JUIAL,% ACl. A~Ut3 5( DLuJ 3ULO.1 l V 5%. 441(UOU tIU.tj IhLA.I.7JU

more details on this financing package.

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3.5 Quality atEnthy:There were four fundamental categories of design considerations which were critical during the preparationstage of the El Nino Emergency Project. These were: (i) a geographic focus for the possible relief andrehabilitation interventions; (ii) identification criteria and process for selecting the beneficiaries; (iii) thecritical sectors for intervention; and (iv) the institutional arrangements for the management of theemergency operations. These were duly taken into consideration and addressed by the Government ofKenya and the World Bank preparation mission in the following manner.

Geog hic Focus for the Relief and Rehabilitation Interventions - The GOK assembled a group ofmulti-sectoral specialists from the Ministries of Roads and Public Works, Environment and NaturalResources, Health, Local Government. Finance and Plannineg and the Office of the President (OP) inDecember 1997 to begin the damage assessment caused by the rains and to plan for emergency operationsin those areas most critically impacted by the flooding. The El Nino Disaster Coordinating Committee waichoused within the OP. Many of the hardest hit areas in the northeastern part of the country werecompletely cut off by road. Food supnlies were being alifted into the-e arPe.a hv the Kenyan military andthe OP emergency task force was coordinating these efforts together with some external relief agencies suchas the World Food Proaram. The OP task force's initial renort declared 23 of the sixty districts plus theprovince of Nairobi as being disaster areas warranting priority emergency operations in order to forestallthe additional loss of life in these areas due to dlisease and stsrvation. The emergency management untwithin the OP was in constant liaison with the District Disaster Conmmittees and the DistrictCommissioners. The first World Bank m issinn to assess fhe damrnage an-d the proposals bein.g prepared bythe OP task force was fielded in February 1998 followed by the appraisal/negotiations mission of April -May 1Q98. During the course of the GCOK/World Bar ,l nrn;Act p -rtions, the A_hF began its owappraisal of possible AfDF parallel financing as requested by GOK. During the course of the appraisal,the criteria for determination of those districts to be assisted under the ermergency oper-ations werebroadened, and an additional 13 districts were added to the list of those eligible for emergency assistance,bringing the total to 36 Aistrictst and the pnrnv-e of M_-on.

identification Criteria and Process for Selecting the Benefici&ies - flis.C.t Disaster CoZ--es were setup in all El Nino storm impacted districts beginning in November 1997. These comnmittees were chaired bythe re tive Di strct C-i-.--;ssioners n.d comprised of Oficers frl.l t'Le vnlul siSmisryj departneitshaving responsibility for health, food relief, roads, bridges, water supply, transport, and communications.The toomhighest j1ities Oide.nutied by) -U-se comu. itiees weafood reliefund aunug supplies. IVIUCfl o1 L[iearly food relief was distributed by air transport (mainly to the northeastern part of the country) as the roadnetworks were cut off by the flooding for severa m-nonths. Drug supplies -were; of an equally high priority inmany areas as a result of the flooding and were similarly distributed by air. The World Baniks comparative

I_ ,Ji r2 ns eu 1reDititDsseadvanLages did not incl-ude tuese eairy enoi-Lts of ouuu and drug s-uppuies. saresultOftheDistrictDisasterCommittees investigations and proposals to the OP, it became clear that the restoration of roads andbridges, water supplies, ard heealth falc ies were the hignest priorities being presented. During projectpreparation, it was agreed by GOK and IDA that projects presented by each of the districts would beprioritized, and beieficiaries tageted by a methodology based on the following ranking hierarchy: (i) lifesaving interventions, (ii) restoration of essential services; (iii) restoration of economic activities; and (iv)the saving of existing assets. Each district was allocated a part of the budget from the IDA credit based onthe population and the severity of the flood damage to that district The districts then presented theirpriorities with justifications following the above criteria. Verification checks were conducted in the field byconsultants engaged by the El Nino Emergency Project Management Unit (more below). Adjustments weremade to the priority lists based on a fine tuning of the application of these criteria and guideiines.

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A Manual of Procedures (MOP) was agreed upon during Negotiations which formalized the criteria forsub-project selection, as well as setting up all other project management guidelines such as procurementand payment procedures.

Sectors for Intervention - As described above, while food and drug distribution were the highest reliefpriorities, the role of IDA's financing efforts were to be directed towards the most urgent repairs andrehabilitation of infrastructure. It was very clear from the outset that the highest infrastructure prioritieswere associated with the rehabilitation of urban and rural roads, restoration of water supply services, andthe repair and rehabilitation of district health facilities which had been damaged by the rains and flooding.These were the areas of focus which were presented by the District Disaster Committees to the OP, and inturn presented by GOK to IDA for urgent financing.

Institutional and Procedural Arrangements for the Manaaement of the Emergenyv Operations - In 1998 theGovermment of Kenya was slotted into a "low case" lending scenario by the World Bank's management dueto governance and corruption issues. Given that, it was only on an exceptional basis that the World BankBoard of Directors agreed in July 1998 to approve the El Nino Emergency Credit for US$ 40.0 million.The Board approved the Credit with strongly worded accountability concerns, noting that those concernswere only overridden by the deeper concems directed towards assisting those potential beneficiaries worstaffected by the El Nino stonn events. The Board transformed those strong accountability concerns intomandated quarterly technical and financial audits to be conducted by an internationally recognizedaccounting finn. The cost of these audits was bome by the borrower as a part of the Credit.

Given the multi-sectoral targets for investment. discussions were conducted between IDA and GOK on howthese interventions would best be operationalized. The initial proposals by GOK were to have separatemanagement units within each of the responsible ministries. These would have been the Ministries of: (i?Public Works and Housing; (ii) Environment and Natural Resources; and (iii) Health. After extensivenegotiations, it was agreed that the quickest and most efficient way to implement these urgent interventionswould be to recruit skilled project management specialists from the local private sector and have themmanage the onerations out of a fairly autonomous govemment entity located witiin the Office of thePresident. The agreed management structure called for the recruitment of 3 officers with extensive privatesectnr exnerience to fill the management nositions of- (i) nmiect manager- (ii) nmprorement qnerinliqt- aind(iii) financial management specialist. These people were recruited, and after some initial turnover - theoriginally hired prmect manager and financial msanagment specialist were dismissed - settled into thteirpositions and worked with the other technical staff seconded from the line ministries to manage both theMTA fin'pndA inrve_ttnet,t ,_ well s, q the Afrig'gn flPvepnrnmpint Bannk filman,rPA invpgtmpntc Th. dvau.tnd5v

operations of the El Nino Emergency Project (ENEP) were under the control of the Project ManagementT Tnit (PMT n) A cnepnis T carnl Nftir,p (Wn w ruvac prpat, tn frmnilFu Petahlich thp PM! T nn Maox T)1-1 .- ,I -- x- 'k,I -- / 1- r - -1-1 -- -o-- -- -- -- IX1998. It should be noted that the advertisement in local and regional newspapers for the position of ProjectManager attruetpei nuvr I20 resnsiesia and the QAA-e_tinn pro,-es as conducted h,y a" noroAAi non-

with one World Bank staff member as an observer.

The PMU immediately engaged six engineering consultant firms (the targeted districts broken into sixgeo-1-.,s zones) to-: (i) .vie t.'. -Ubr*"2A p..o..ties (ii , .ede:'ed Ae s of*u --- ad

&L"5 Flll1. £AJ'/ ~J. fls . uLl' au"1IZV%U jJlLJLLl16,0 killJUU' Lu%LWO~V U%.aLa IU .IUI VI LV qrLVU

sub-projects, (iii) develop the associated tender documents, (iv) support the PMU during the tender processiUncluing eVaUUaUti UoL VIVO, nId (v) OuJ vJiVse LUJ, seIle eAd 1 UolILLUaLrL ILULIr 1r.Uobl: LMU1t LU UV LUI WipiUUn

of contract - including the full duration of the 12-month defects liability period.

A Project Steering Committee (PSC) was established under the design of the project to provide an overallILiLl IveI I o Luo,IIILUng anU Uvua1U4LIU f Ul U1 ec PIUJeC% irlle,-U,InLULUUii peUrf^U21A Unu LU UbssL LuIh rivLu in

-5-

making management changes when and where required to deliver the project outputs on time. The PSCwas intended to meet at least once a month to review the overall management and direction of the project.It was comprised of nine Permanent Secretaries, chaired by the Permanent Secretary, Head of CivilService. One of the primary roles of the PSC was to oversee the annual indicative plans and assist thePMU in matters, where appropriate, in streamlining bottlenecks.

Ouality at Entry Overall Ratin2

Based on the above description of the preparation and design of the project, the rating of the quality of theproject at entry has been assessed to be satisfactory - see the ratings listed in Section 2. There was noO alitv Assurance Groun (OAG) review of the nroiect to assess the OQuality at Fntrv

4. Achievement of Obiective and Outputs

4.1 Outcome/achievement of objective:As mentioned in Section 3, the primary objective of the project was to support the Govemments ongoingefforts to mitigate the serious effects of flooding attributed to the El Nino phenomenon. The project aimedto: (i) minimize life threatening condition in 35 impacted districts of Kenya and the Province of Nairobi byrestoring potable water supply and health facilities; (ii) facilitate improved economic activity through therestoration of key routes badly damaged during the El Nino storms; and (iii) demonstrate that streamlinedprocurement and payment procedures improved the efficiency of project implementation, and that some ofthese procedures might be adopted by GOK into their mainstream project implementation practices.

At the time of Credit effectiveness in October 1998, there were actually no life threatening interventionsrequired. All food and drug supplies to the isolated and vulnerable areas had been addressed by the GOKand relief agencies more appropriately suited towards disaster response. However, the other statedobjectives of restoration of essential services, infrastructure assets, and economic activities were achievedas measured by the agreed targets and outputs. The restoration of essential services was achieved throughthe implementation of 33 IDA financed and 15 AfDB financed water supply contracts, and 54 IDAfinanced health facilities contracts. Restoration of economic activities was achieved through theimplementation of the 23 IDA financed and 11 AfDB rural roads and bridges contracts, and 8 IDAfinanced urban roads contracts.

The demonstration of improved project implementation efficiency is discussed in Section 7 - Bank andBorrower Performance. This objective was certainly achieved through the reduction of turn-around timesfor procurement and payments to contractors and consultants. As a result of agreed upon specialprocurement and payment procedures for this project, as detailed in the negotiated Manual of Procedures,the turn-around time from advertisement of the bid to the mobilization of the contractor was reduced byabout 50% when compared to other similar civil works contracts recently financed by IDA. Annex 10shows this comparison in the form of graphs, comparing the average time taken from advertisement tocompletion of contracts for the 116 ENEP implemnented civil works contracts in relation to the average timefor 11 urban roads contracts under the Urban Transport Infrastructure Project (KUTIP). In relation topayments, the average time for payments to contractors and consultants for ENEP was 40 days while for asimilar civil works project - KUTIP - it was 66 days.

4.2 Outputs by components:The following table summarizes the physical outputs of the El Nino Emergency Project, including the ElNino component of the Urban Transport Infrastructure Project, Credit 281 1-KE.

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Annex No. 8 presents details for all 116 IDA financed civil works contracts. These details include contractvalue, co,t".-Mn.e.e.- .=.t a-n,d c-ompeftion f-at-es, fj;q:et, nf%nftet+r, aln.d rneoilnstt f;rM resporCiIA'e for ti.e-design, bidding, and supervision.

Components Outputs under IDA Financing| Outputs under AfDB Financing1

|Civil Works for: __ ___

- Duural IlnalIa A, Rr.dop,e ?3 r^-nntrntJ-t 1 1 nontrnrtl

| 1 1,634 km of roads and numerous bridge1l634 km of and drifts rehabilitated

- Water Supply | 31 contractq 13 contractsl l 45 water supplies rehabilitatedl

- Health Facilities { 54 contracts Not covered

IGoods 2 contracts for water supply chemicals anc 2 contracts for water supply chemicals andequipment plus numerous office equipmenj equipment plus several office equipmenti

l l and vehicles small contracti and vehicles small contracts|Consulting Services I 10 major consultancy services contractsl IDA financed

including audilOperating Costs 3 professional staff to manage the projecq Not coveredi

plus other office support such as rent anl_ i~~~~~~~~~~~~~~~~raVuiling cUSLS.J

Civil works for: j 8 contrac Not coveredJrbar. roads UI..-. CUTIA 67 h-r. of urbani roads lhilUl:ed ol-

Credit 2811-KE reconstructec

As previously mentioned in section 3, a condition for approval of this Credit stipulated by the Board ofDireet-ors, wras that--+ quff.erfly linn-a",i ar.d teCl--ie -audit --ere -egu to- --a;pA out by a,-A.U flA~ , V L tLCf ~.bL fl 1 -fftfldff C.elfl-f L.dlf aflu -ift werS. L& n4 . t,WUV fl'.uI. 01.5

independent professionally accepted accounting firm. At various times over the three years ofi,-plenIentIration, LlVVLUUa1 ar, fiU11.1CJ i,s3LCS were iUdeLLif1i1 by U UL aludiL jUL1 arLI, urL U L VUUU L at'.ertio

of the PMU and IDA for resolution and improvement in the management of the identified contracts.dLUuILiVnIa1ly, ULe qU 'LILy Uf eoVl..UtarL,IL bVLieVe Lre11UdLe by .r LUVIIllS UI UIV six 1TeL,U1.1-u UliUL Ws raiseU Uby

the technical audits. Through this extra layer of quality control, the consulting services were improved anduir LL)'lY Uo use Iu irus u Ibum .- re cons5uuc Utted u ider ulile civi11 Works lnItI s Was kwpt io a hiug standnmu for

all the 116 IDA civil works contracts. In a few cases where the quality of civil works did not meet thespecifications of quality sup-ulated in uie conutlats, and where the coniractor refused to comply witn thesespecifications following notice as per the contracts, the contracts were terminated. Two eontracts in thehealth faciliiies rehabilitation sub-component were ierminated, both were witn tne same contractor.Actions were also initiated against one of the six Technical Unit consultant firms for poor performance butthis did not lead to the termination of the contract. Termination of contracts due to poor perfornance ornonperformance is a standard remedy embedded in contracts which had not been enforced as a remedy inthe contracting business in Kenya for a considerable time.

Tlhree consuitancy contracts were awarded in the final year of implementation of the project to fuirtherindependently assess the social impacts of the project investments and the quality of the works constructed.The conclusions of these reports are positive and can be found in summary fbrm in Annex No. 11. Therewere therefore four layers of checks on the quality of the contracts: (i) the PMU; (ii) their consultants - the

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zonal Technical Units; (iii) the audit firm; and (iv) the monitoring and evaluation consultants. The BankSupeirviSion missioUL5 alsu reguiar:y visiteU iiC conULdci sites on a rdnuoM oasis to confirn anu veriuy tieinformation provided from the various other layers of supervision.

4.3 Net Present Value/Economic rate of return:* 1'Jlicable .^or em %.4fgle,^cY -.JLPIAtfoi

4.4 nanc.ial ra-.e nf,return-

Not apolicable for emergency oTerations

4.5 Institutional development impact:Strearnliinin the ,roject procurement and payment procedures was one of the project obiectives. While thePMU organizational structure may not be one that is particularly recommended as a general institutionalmodel (Section 8). the more efficient delivery of outnuts; i-e= comnleted civil works contratqs are a resnIit

which can be further replicated within any other formalized contracts delivery institutional framework bysimnlv modif,ving existing nrocediireL. The in-titntiona1 develornment impact iS very clerly demnnqitratedby the improved turn-around times achieved for payments and procurement.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or i-mplementing agency:Security Issues - Partial ImpactTnere were several short periods during the implementaiion of the project whereby the security of ,contractors, consultants, and PMU staff was at risk. Unfortunately there were 4 deaths of contractors' staffdue to ethnic conflicts and banditry. Tlese deaths placed certain contracts on hold for periods of time andthere were also times when the Technical Unit consultants (engaged by the PMU) had to vacate their zonalheadquarters until the conflicts were brought under control by government security forces.

5.2 Factors generally subject to government control:Initial Resistance by the Government to the Establishment of an Independent Project Management Unit -SuDstan uai impactThe Credit was approved by the World Bank Board of Directors in July 1998 and declared effective inOctober 1998. However, due to GOKs ensuing reluctance to abide by the terms of the agreements reacneaduring the Credit Negotiations related to: (i) the selection of project management staff; (ii) the relationshipbetween the PM'L and the Project Steering Committee; and (iii) issues relating to the secondment staffing, ittook until April 1999 before the project fully began implementation. Seven months of implementationstart-up time were wasted on an 'emergency" project.

Replenishment of the Special Accounts (SAs) and Proiect Account - Substantial impactGOK's requests for replenishment of the SAs were not made on a regular time frequency basis, e.g.monthly or bi-weekly. As a result, the SA was periodically drawn down to very low levels wherebytransfers could not be made from the SA to the Project Account causing serious delays in payments tocontractors and consultants. There were two SAs, one for the El Nino Emergency Credit (Cr. 3120-KE)and one for the El Nino Emergency component of the Urban Transport Infiastructure Credit (Cr.281 1-KE). Both were held in offshore accounts and were managed by the Kenya Central Bank. Delayswere also experienced in the seemingly routine transfer of funds from the SAs into the Project Account forreasons which were not clear.

Payment from the SA in US Dollars - Partial ImpactThe banking regulations in Kenya did not allow for the SA funds to be paid out in US dollars directly to

- 8 -

certified creditors. Rather, funds were transferred into the Central Bank of Kenya from the SA, converteditO Kenyan iluirgs,and uieir, if a pa-yrnenL was [req-Uire Lo be paiu LU[ Hi UL UUS alb, .hi nmllyauiShillings were reconverted back into US dollars. Exchange losses were accrued and delays in these foreigncurrency payments unnecessanily expenenced because oi uiese c uiiDeusoine idusauuon prucedures.

Relationship Between the Project Management Unit and the Project Steering Comuiutee - Partia impactAt times during the implementation of the project, the PSC became involved in micro-managing the project,whereas their function was intended to be one of a higher level mandate in ensuring the overall performanceof the project's objectives. It was never envisaged that the PSC be involved in the day-to-day details ofproject management. in a few cases as well, the OP became involved with management issues of tneproject, making the PMU's responsibility and authority unclear at times.

Sustained Poor Performance of One Consultant Firm - Substantial ImpactOn numerous occasions the continual poor performance of one of the consultant finns engaged by the PMUwas identified by the PMU, the audit firm, and the IDA supervision missions. The issue was raised withthe PMU and Government on several occasions by the IDA mission supervision team but no actions wereever taken by the PMU or PSC in order to remedy the situation. The position taken by the supervisionteam was to have the client invoke the appropriate clauses within the contract and have the firm's scope ofwork reduced, or have the firm terminated, based on documented poor performance and falsification ofdesign and supervision work. These recommendations were contained in several of the mission AideMemoires, and at one point in a letter written by the PMU to the particular firm reducing their scope ofwork by 50%. However, that letter was rescinded by GOK before it could be put into effect. Following theGOK decision not to take any punitive actions against the firm, it was decided that the PMU would need tosupervise the consultant firn more closely and have the firm more closely monitored by the audit firmundertaking the quarterly technical and financial audits.

5.3 Factors generally subject to implementing agency control:Performance of the Project Management Unit - Substantial ImpactOverall, the performance of the PMU's management of the project was highly satisfactory. The majority ofthe technical staff from the relevant line ministries were of a high technical caliber and worked long hoursin achieving an ambitious set of targets. Delivering 116 IDA financed civil works contracts and 26 AfDBfinanced civil works contracts totalling nearly US$ 90 million within a three year period. The ability of thePMU to effectively coordinate and manage the line ministries, district authorities, beneficiaries,consultants, contractors, and donors was the key to the successful delivery of the project outputs.Significant reductions in tum-around times for the procurement of consultancy services and civil workscontracts were realized - see Annex 10 for tabular and graphical details of the procurement results. Theaverage amount of time it took to sign contracts from the time of advertising the civil works bids wasreduced from over 400 days for KUTIP to just under 200 days for ENEP. Reductions in the length of timeto affect payments to the contractors and consultants were also realized. Average payment turn aroundtimes for ENEP were reduced from 60 days for KUTEP to 44 days under the ENEP project management.

5.4 Costs andfinancing:Budgeting Process - Partial ImpactFor this Emergency Recovery Loan (ERL), IDA funds financed 100% of the project costs and there wereno significant costs that the GOK was required to bear. There were occasions when the Govemmentbudgeting mechanisms did not allocate sufficient funds for the IDA credit in the annual GOK ENEP budgetbecause of macro-economic ceiling constraints. So while the IDA financing was available, themacro-economic budget ceilings on occasions created constraints on the disbursements of project funds.These problems were eventually resolved through budget adjustments but significant payment delays were

-9-

experienced at various times throughout the project implementation period.

Reduced US Dollar Financing Available - Partial ImpactAs a result of the erosion of the US Doliar against the SDR over the 3 years of project impiementation,there was a reduction of financing available for contracts of roughly US$ 2 million.

Reduction of Scope of Works for the Nairobi and Mombasa Urban Roads - Partial ImpactDue to contract prices which were considerably higher than the original engineers' estimates, tme numt)er ofroads that were able to be accommodated within the budgeted amounts were reduced. For Nairobi, thenumber of roads included in the contract went from the originally planned 21 down to 13; and forMombasa, the number of roads went from 28 down to 25. This was mainly attributed to the very roughpreliminary designs - due to time limitations - which were used to draw up the engineer's estimates. Thefinal detailed designs incorporated significantly more drainage works than the initial preliminary designsconsidered.

6. Sustainability

6S 1 Rntional fnrssaivni-ili- v rnting-

For the urban and rural roads investments, the roads and bridges will benefit from regular maintenanceinniits thrni,oh the Rond Mnintenanrfe Fue! T.Pvv Fundz (RMFr F) generpted firm file! salep The RMFT F

mechanism has been in place for over 4 years now (a condition for the KUTIP Credit in 1996), and as ofTji,7lnnn0 hns been iinder the ouijrcioaht of the Vi,nv2 Ronads Bforrl Hou.eywpr thoe noliy- frmwe%ortI fonr the

investments in water supply and health facilities does not appear to have the same foundation of financingresow- csfor o,erautionsc a-ni maintenwaire For thecse t.n csuhcpsetors the ciSct inah4iihz *tina -u.A11 h0ue

to be that of "Unlikely". Sector work is currently ongoing through World Bank inputs, and it is expectedth.4 th.e -policy, .. mAxu,,or for th.e -vae - -up, p ecrtor wi1 be ec- .. ifhedA h- GOKIV befor-e th.e edA of 200,)

providing for better operation and maintenance financing and operational mechanisms. Given that the-. yof the -rn,ect,,e..ts .,nder t-A- Credit ,vere in ro.A.ds (50O% of the -e,At e.-uo,,nt), the -,+er.-l

.. _J ... j - -_ - - _ - - ", - -.~J~VAL&R - * %_&- - -t .1l, Lf _ C*

sustainability rating is "Likely".

6.2 Transition arrangement to regular operations:As this was aun etmergpenv oneration, there were no trnsntion arrangements to reglar operations developed

in the project design. For the water supply and health facilities investments, the PMU mandated theroncihltnnte (Terhniel T Tnit&) to ronntiminllv ePnae in dinlnmne with the heunefrinrie'q as to their roles in the

operations and maintenance of the investments. While informally delivered, it was an attempt to solicitmore involvemuent of the hpn,efi iaries in the long-te-rm sitainability of the inuestments, for their ownbenefit. For the roads investments, as mentioned above, the concept of financing their maintenance throughthe P ;Lf F iS a ,ry-, rroc;it;,x inetihttitornalieA annrouarh to miaranteeing the xA%hihitV of thece inueowmipn.tc

Once the contract completion certificates are signed over to the city, municipal, or district authorities, it isthen incm.bent upon t.h.ose authorities to budget fthe ma-intenanrce needs for thoce rouads through the F FAPT Fmechanisms and this is working well under the Kenya Roads Board supervision.

7. Bank and Borrower Performance

Bank7.1 Lending:Satisfactor - IDA responded very quickly to a request from the Kenya Head of State, President DanielArap Moi to the President of the World Bank in January 1998. By February 1998, the first mission was inthe field, and the project was appraised and negotiated in Kenya in May i998. Trhe Emergency Credit wasapproved by the World Bank Board of Directors in July 1998, and became effective in October 1998. The

- 10 -

nrenaration of the El Nino Emereencv Project was lead bv a Kenvan team of technical officers who wereseconded to the Office of the President and in constant contact with the 23 (later 35) most acutely impactedDistricts: The nrioritv needs were identified with District inputs as the driving mechanism. IDA assistedbest in the preparation of the project in relation to the dialogue around the institutional arrangement optionsfnr the nriroect management. Initially, the Government stronglv advocated an arrannement whereby theappropriate line ministries would each establish their own project management units. However, during theC.redit Negotiationqs it was eventnally a-greed that in order to facilitate the qulick implementation nf theproject over a 30 month period, a semi-autonomous unit managed by professional staff hired from thenriv;atp epctor would mnnage thp prnijet frnm a unit within thp Offine nf thp PrpMident

Snpecal nr^ciren.mt / r tn.rt;ina &t.nripm.nte uwpre agr_ oinn hath the WnrIA ^r n,l &nd the

Government of Kenya to facilitate quick tum around of procurement processing and payments. Annex 10nroa,AAaes a corpnar.son of afti. nra-..esA of-r -ra_' ,ran,at tindAr th. c,frnalinned n -ranA,-e in.

relation to another urban roads construction project (11 civil works contracts) financed under KUTIP.Frorrn.,advearnisr..t of cnor.,tct to nn'vr.,nnna.a.nce.. of cont.rnt, then n,,nrnS mae wras reduce byAna half umnder* ViL tv %, ltIll. .. '.JAUI-L LV ......It,lfLt* VA t4JI I- , -LSa f - LflU' VVUa -_ -, u Vt -1.1 tflUtI

the ENEP arrangements as compared to KUTIP - from just over 400 days for KUTIP to just under 200A---..-A UMC) A VD.-__na--n.,a..t-A f_.am+U- -.4-+

the PMU and facilitate the process. The MOP contained the streamnlined procurement procedures withWIch ALIMA iP AVILJ was t.AIa&rVU Lir.iplIArLerAL41 L ul ."FVJIVtL. LAfir.anc IL CLIG aI lIGI.IAL specialOit Was a Io

hired within the PMU as per the project management design. This additional focus on financial issues&IlUWeU UIV LUIIkOaLUUIIU UIUV IV JA1nfIoV1iL PVIeUt pc i LU to be sigifaILa.dUy I.UU.dueU 4a WeIl as VledUiLIr LU

improved contract performance. The completion of 116 civil works contracts within a 3 year time horizonwas possUibe Uy because of u1es Uh1p1UVC1UerIL on pr[u erert and pa-y111,er. IeUpUlUe Lilleb.

SctLor spcuifi 'cilica sUe wb ere seconded frUru us Ili s iinC 1IU1UblUV Uto riviu o prouvidU a Su-oUng

technical core team of personnel. The supervision of civil works designs, the preparation of the biddingdocumentation, uhe bidding process itself, award of conu-acts, and the supervision of works oy the TUswere all overseen from a technical perspective by these seconded staff. There was a visible commitment onuheir part to work long hours to get the project completed.

Project design called for 6 zonal T'us to cover the difierent geograpmc areas oI the counry wnicn wereimpacted by the El Nino storm events. These TUs provided for the design and supervision functions for allcivil works financed by both iDA and the AfDB. A final layer of quality control on top of the PMU/ i1Uswas a quarterly technical and financial audit undertaken by an international accounting firn. The fact thatali the works contracts were completed by the end of the Credit period to a generally high quality standardjustifies the high degree of supervision given to the 144 contracts (IDA and AfDB contracts) managed bythe PMU. While the GOK initially resisted this extra layer of quality control, primarily because the cost ofthe firm's services was financed from the Credit, the value added in terms of better assuring the quality ofworks for which the financing was earmarked was clearly recognized by the PMU over the course of theimplementation of the project. The audits provided for a truly independent assessment of the PMUsperformance, documenting the professional standards within which the PMU operated, and the results andoutputs which were achieved.

7.2 Supervision:Satisfactory --- Over the three year implementation period, 10 supervision missions were fielded (3.3missions per year), with 156 staff weeks of inputs, at a cost of US$128,700 - see Annex 4 for details. Thiswas a higher level of supervision for a $40 million dollar credit than would normally be expected orbudgeted for, demonstrating the strong commitment from the Bank. This higher commitment was also theresult of the mandate given to management by the Board to assure the quality of the investments.

- 11 -

Additional resources for the supervision of the urban roads component were disbursed against KUTIPadding to the overall supervision input for the El Nino Emergency Program.

Because of the emergency nature of the investments, the Canadian Government granted the GOK trustfunds to sunn1ement the sunervision of the rnoiect- One full time engineer enraared thlncrh a Cqandlrn

consulting firm, was in place in Nairobi for a period of 18 months to assist the PMU with the rural andiirhnn rnadq investmentq Miq eff.^rts fhm-ied on the renvi-w of road and bridge designc, biddinag docurments,and bid evaluation reports, as well as field trips to assess the quality of contracts execution.

On several occasions, as a result of the IDA supervision missions, deficiencies on the part of some of thecontrators anAd cnsltaqnts were identified by th toe e amnd the -A ged'tior., , -.e - +-.n*oA ;r the Aide

Memoires to address the quality control problems. These were followed up by the PMU and theresonnncwhCo r ntry, Office .n.fF-,n_ _r,ndA a 0-n-..-A n- i- presencon- the g nd in betv3een *1.0supervision missions. As a result of this combination of supervision inputs, many of the contracts thatwere deerrA to bon+.i1h, "at r.s r..d sn and -l to- -A -n,l+-A *n +se -out.- i+-A-A 4Up

flQ,Uee..1AV ii V. F -tLtUIOuJ .1an .Oa -V %4 %4fl4 .1 OJfl ~..VLLjLFI.SA M LV W % tj 1afiY OULhLU.U O~L VJUL Ul ULA..

contract documents. Not all contractors were responsive to professional supervision, and.as a result, a fewcontracts were term;nated un.der "sigificant breach of contract" I in the co,rcs "'--

high level of Bank supervision most probably assisted the PMU in invoking these termination actions.

7.3 Overall Bankperformance:SatiSfartnru - On the uwhnle Tfl A ' nr-rfnrmnn w- use r,espnnieup tn Cy 's reqiist anr. rntol nurornI! ac

satisfactory. There was criticism raised by GOK and the press that the response was not quick enough.Th e issue of t- i of tde qanic to respond nicrll, er.ough in arn er..ernc op,fonnsuch-ast.sisdiscussed further in section 8 - Lessons Learned. Based on Bank criteria, ENEP was implemented veryquicndy; fA-o a stceholdrc I beeficia.rAi pe-nrsnpti,a this wvas not quick emiou h. Th..s feedback fro... *1.stakeholders is noted, and from the Lessons Learned it would appear that in all such future emergencyopeaion th-r - -A to i u .h _-- in th,a of. -o ,A v-n.l-_ .i -n Ao----Am nnoA i 1ta

project in order to dispel unreasonable expectations.

This was a fairly straightforward civil works project which required the Bank's oversight in assuring thatLIi qLUILY Ion.JUUJ mecha.-LUsIms WeLr Li Fl Lt ass U1L Ui% LLIL ir. .t; VI LUAe .LUIYeL1..L3..ts. 1LI, projecL

preparation and supervision by the Bank staff were conducted satisfactorily. It should be noted, however,,1- - uLe -was atlatoer Jrdlye-e-e.e r 1_-. --- eus ..e-. of *LI SA -w. -I- a .uuwlUIL lr.M t,WVWd M40~aL ULIU IIIJ42UI UVLdy Q?AJJVI1LVJ1I;VU Ul U1, LVL1I1UI,U VI ULU SOt% WIU1.i Waa aLU1UUL4U1V

to some communications problems within the Bank.

Borrower74 Prepa.ra.tion.

Satisfactory The Borrower's preparation performance is assessed and rated as "Satisfactory". TheBnrrower had Alre-ady conduted conside-rahIe nrnieet prepnartion wnrk through an emergrency respnsRF-eunit established in the Office of the President before requesting IDA assistance. This unit had beenpatahlbAMd tn asesps the PI Minn gtnrm einmnap g nji tn idpntif the nriority rehohilititinn umnrkS' Trhiring the

preparation, the various sector departments of the Borrower collaborated very closely with IDA and,.'i.a A ol toe naeesa, b,ac'lrnd- mnfr.in.aon. There os exce!t pnn,mitn,pnt fion these offiaers

and the districts.

7.5 Government implementation performance:Ratisf ctory --- Government implementation performance is rated as "Satisfactorv" but with somequalifications. While the Credit was approved by the World Bank Board of Directors in July 1998, andheanme effeetive in O(ctnher I 99R imnlementation and dishbtrsements did not commence until Mav 1999-

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This 7 month delay in an "emergency project" was due to the GOK attempts to alter the qualificationsrequired for the position of Project Manager following the dismissal of the first Project Manager. Delays inthe procurement of the six Technical Unit engineering design and supervision consulting firms were alsodue a shift in the GOK position which happened to deviate from the structure and procedure outlined in theMOP. By the time a new Project Manager was agreed upon (from the private sector), and the six TUswere selected and formally engaged by GOK through contracts, it was April/May 1999. This wasextremely unfortunate for the beneficiaries and could have been avoided had all parties adhered to the termsagreed up during Credit Negotiations. As a result of these problems, the first Project Supervision Report(PSR) rated proiect implementation as "Unsatisfactory" and classified the project as "at risk".

In addition to the 7 month delay in proiect start-up, another management issue which was not handled in asatisfactory manner by the GOK was the weak support given by the PSC and the OP to the PMU inrelation to the poor performance of some contractors and consultant firms. While two civil works contractswere terninated for poor performance, the case of poor performance of one of the 6 TUs was nevernronerlv addressed by the PSC. The PMU. audit firmn and the IDA sunervision missions all identified thisone consultant firm in particular which performed very poorly, in at least three Aide Memoires the issuewas raised. but no GOK remedies were ever initiated as were allowed for within their contract.

The nverall rating of the Borrmwer is ahle to he elevated to a "S.atisfactorv"; desnite the 7 month delay.because from May 1999 until the Credit closing on December 31, 2001, the implementation support fromrTnCK imnrnved reatly and was indeed satisfhrctnry. The Bnrrower nit in nla-2e the Prmiect MrniagementUnit and seconded adequate and qualified officers from the various Government Ministries - Office of thePresidentt; Finance annd Planning; rnral GTovemrment; Roads and Public Works; Health; and Envirnmentand Natural Resources. The Project Manager was selected based upon competitive selection from over 100Caindidat,ec sw.hn mniptil to tie- mini.nnilu _duprti:ept Tpnitinn. Th.e Pmrimpnpi.e^t Qrk-rinhit and Pinanninl

Adviser were also selected in the same competitive manner.

GOK also established the Project Steering Committee with members comprised of nine PermanentSeretaries finm tbe respective sector ,Minnistres. Th iso assisted *n reduc, sor..e of the nrormrlbureaucratic and lengthy procedures which enhanced the operations of the PMU. Budget allocationswrnAa.A Ar-+nara lh, oAnnistn A. -n-nt;nnA C Qn;An t = "Ma-r P-M-n A ffen;in -r lnn'ntn

and Outcome" - there were occasional problems encountered with the replenishment of the SA, and+.k.f.'.4'... .,..4 nf 'w in .+-^tr ar.d onsn ~. '+nli.,. A144,'.m4 Eiho.' + n'm wer ,lnnic .o, deas r

countersignature of contracts at the Ministry of Finance, this did not significantly affect the commencementof ~~~~~~~U .- y of---o.-r+-As -- eBrwrap :.... .... . . .. ... -. edarzut ;+ ..... fro +-he -p.-U.vt __ 4A'ic_povdeu liyUiL LW~ JlUVU"11.W ALAl LIULLJw~IL ajJJUVLLLU alI MMui& A111111UI Ll.J1LR uJjA1LVaW- 3a..I,JL WUIM1A FjVU V UU

timely and quality technical and financial audit reports.

7.6 Implementing Agency:Hahliu Satiefiatnrv, -- nlpgnitp the i.ntia e-hannr.p nfth.e Pmipe-t M'.Arnacpr aind A ntr kPY St9f4;n the Pr.;ect

Managernent Unit in the Office of the President, the PMU perfomiance was "Highly Satisfactory". ThePII ,A aeAnfn-fiitp ant nitalfflf] rtirnfAce;n1na1 t'fhn,4npal anti ellwynAvt t#url zrn t~4rAAA~Q*l ;,MTJ ,h9ade _ ste and _sified prfsir ehi&&.-F pot- 1.ft,,L -_5e eiatd;r a.a,5

the project well to completion. The above average dedication was certainly due to the quality of staff.-rn,+i frn Lh. np..-af*n ecat^-r &ant Ab..e to +l- s.. -alary ir.c_r.Lves giver. in She on-A-A 6+0P as

well. Although it was impossible for the PMU technical officers to visit all contract sites, they made greateff.ort to visit samnpled on-.+- 'o es h..'.at + hi y were, i--..ler..e.t onA -a -...ely basis .'.oA .uu-Ad

quality specifications. It was the role of the TUs to supervise all the works at every contract site on aUay-uy-uay vasis. O.e of tie i UsA perfo1rmedU pVoL'y LLILULLULLutL UalU pJUJwLt Ur. pLl.L1LaUVio UUL UdesJite

repeated attempts by the PMU to have their scope of work reduced or their contract terminated, the supportJIUIU '.J%J1% Wa3 1hUbL 1VL Ul1.h1IU1r, aLLU UiV ILILI %AJhLLUU-U LU -V,1IUI1U jJVI iLLIU ULIVIUIULY UIUL UI,

-'13 -

prniect completion in December 2001 It is a reflection of the good reniutation of the PMU nerffirmannethat the French AFD funding elected to utilize the PMU for the management of their rural roads and water

unnlv nroiect comnonentc.

Refe-r to Annex 10 - Acreler_ted Procirem.ment P.rocessinog Anlysis - to see the mnrle-pd imnrnvpmpnt irtumaround times for procurement under the El Nino Emergency Project special procedures in comparisonwxith another smalar rcivil worrc intpnive proect fi.nanrcedb the Wolrd Banklr n wel The processigtimes were more than 50% reduced for the ENEP contracts on average. The PMUs management of theci,

4i! ,n,norlr rrnor.tv tsr ,avola xe!et. There svere no .cm-ni for the nro*atr suplyni ard elth 1.c.1+Iies

contracts and the contract costs were kept below the originally signed values. For the rural roads andb..drges c,.ponent, Lhe.r was only or.e c.l-ii fle wh;ch - was -vAue at 2.8 Qof t*. cor.tr-ct v -e- A -.

Ut t5~O'.tfttJ'*t4t, fl4~TV55 tAffly 'Jl,t An IL50 TA ULfA V 5flU*, a' -U. /0 V.A UUt, VMJlUast Va.Ut. rnuL

for the urban roads contracts, there were 5 contracts (of the 8) which had associated claims, these averagedV.SV /0 Vl UIlt 5vAlUOt. VGU%ta,.

7. 7 C(e.a, orn.'I Arrnwr nprlrfotn,nco.

Satisfactory--- Overall, the Borrower's performance is rated as "Satisfactory".

8. Lessons Learned

Over the course of the 2-1/2 years of implementation of the El Nino Emergency Project several valuablelessons were learned in relation to the special arrangements agreed to in order to speed the progress of thisERL. The PMU managed the implementation of: (i) 11 6 IDA financed civil works contracts; (ii) 2 IDAfinanced goods contracts; (iii) 24 AfDF financed civil works contracts; (iv) 2 AfDF financed goodscontracts; and (v) numerous IDA financed consultancy services contracts. Many expectations were raisedas a result of the prelininary discussions between the Kenya Head of State, President Daniel Arup Moi andthe World Bank President, Mr. James Wolfensohn during their January 1998 meeting of regional heads ofstate in Kampala, Uganda. It was at this meeting that President Moi requested assistance from IDA torepair the extensive damage caused by the two months of heavy rains - termed the El Nino storm events.At that time, the Government of Kenya was in a Low Case borrowing status with the World Bank due toissues related to corruption and governance. In eventually approving the credit package, the Bank's Boardof Directors did so with considerable reservations and conditions attached. On an operational level, inorder to respond to the urgent nature of the assistance required, both the Government of Kenya and theWorld Bank adjusted their standard practices for the implementation and financing of the emergencyproject. Here are the primary lessons learned from this project implementation which should be drawnupon to assist in the design of future operations in Kenya.

Lesson No. 1

The establishment of the PMU and the Project Steering Committee (PSC) proved to be successfulbut the replication of this model for future operations should be advocated and adopted only inthe absence of public sector reforms which would allow similar PMU functions to operate withinthe established ministries' organizational structures.

The establishment of the centralized PMU within the OP was extensively discussed during projectnrenaration and agreed upon during Credit Negotiations. The rationale for placing a single centralizedPMU within the OP was related to the urgent nature of the response time required and not to themulti-sectoral dimensions of the interventions. Had an emergencv response not been reauired thePMU might have been more appropriately "housed" in each of the sectoral ministries, within existingdtpn2rtmentk therehv assistii nmiroect mananement canacitv huilding in each of the ministries- namely

- 14 -

the: (i) Ministry of Works and Housing (for roads); (ii) Ministry of the Environment and NaturalResources (for water supply); and (ii) Ministry of Health. What is of importance in terms of lessonslearned here is more that the PMU was allowed to function with streamlined procurement and paymentprocedures (as detailed in the MOP), and less, where it was placed within the govenmment structure.There were clear reasons of expediency for an ERL in locating the PMU within one government entityfor ENEP. but this need not be the case in attempting to replicate the same management functionalityfor future operations.

The open and competitive recniitment of the 3 project management staff from outside of public civilser.vice contrihuted most sipnificantly to the imnmved nrniect mAnagement and timelyv outnuts of

ENEP. Time-bound work programs; strict adherence to the conditions of the contracts; and effectivePnainePprna qimnen.inn mtnnuntnnt firms tn nrnvide fnr the detniled &.6aionq hidi-na dnemmerntntinn nnd

award adjudication, and contract supervision have all lead to the successful completion of 114 of the1 1 C ontracrts hbefbrethp CnrAit clonsino Aato Thpcv orp cimnlu o^.n.A manacpmnvt nro-tirpe whit-h ron

easily be replicated within any of the Govemment Ministries/Departments. The replication of the PSC.,.as en,ovrsight er.tity sx,All not be as nac,ilx nctch1ished for 4'u,h.ra ancra^ons. LIo',Ang nine ne>rrnonn.nt

secretaries brought together at least once a month over the course of 30 months is not a practical.an-ngerent. U--_oi,or f1.e An-n4n +h- -- A -er etrAovidea. be -1;-li.0t0A a a less exec.i -,. lI,ol

In fact, the revised GOK procurement procedures now allows for each of the Ministries to play more ofaia role ttat + of. th+ DC in A ere wold apa +obe no nA -A fur opeation to

establish anything quite as high level as was for the oversight of the ENEP PMU.

Lesson No. 2

With streamlined procurement and payment procedures, the GOK was able to reduce thefur,.-aro-urdIU Utim fUo UIC UwarU Uon WLFUAI uy ro-ugli'y 5U70 WIlt suuuatr *.rijJFUVemIenL HI.

efficiencies for payments to contractors and consultants realized.

In order to hasten the implementation of the El Nino Emergency Project, it was agreed during projectn+arado 4 ,o4�n. -- F at.co.on . a FayI. co+.. ,oA... o. a,1 .oal. o 0% cn,,U11111CpI--F,-.;.n +-hat ce*..t procuer.ent ar.d fir1u,.ar.ci / --a.er.t prc.ues- -v-. 'have to Ue. 3UeO-JU;,reA

within the GOK systems in order to meet the agreed upon implementation schedules. The PMU wasg.Ven1 poWe,-1 '.o ce.wv 011 LJuL.U.rUI c.ua't.. ubelow JUS$ 300,000 WhIle lalrVeL V.UILLIasL haMU Lt

obtain the approval of the PSC before an award of contract could be made. This allowed theproc.-+.n to prvoceed Ar a -ve.-y xeiiu mn.rwe c a-edt 4-h ---- I f -Gul Tender~LUVI.l~IV,LiL LU plI.U Lli 4 VVIY VApLJ1U1UVU 111Ua13Z1 WJ1l,i L'U11UJJ4LVU LU UIV, 11U11114L %.sWIU A VI lUrVL

Board procedures which were in place at that time. Annex 10 compares the turn-around times (fromadvUertlismL U of tendUer to awarld of ontUrC.t) foUr Ule I IU LNi .41U1J UUllrUdtLU tU *I1 Icontr-acL'

implemented under the IDA fnanced KUTIP which used the nornal GOK procurement procedures.As can be seen from ue table and graph, the average ttme -wa reduced froml roughly 400 uays to justbelow 200 days. This improved procurement response time does not necessarily require a PMU / PSCinstitutional arrangerment to be replicated, jusT the functuonal procedures used under ENEir contractmanagement need to be in place. Since ENEP was prepared and implemented, the GOK procurementprocedures have been significantly revised under the Marcn 3u, 200I Exchequer and Audit (PublicProcurement) Regulations, 2001 Legal Notice No. 51. These new procurement regulations are muchcloser to the EtNEP procurement procedures specified in the MOP, requiring iess speciai arrangementsto be adopted in order to hasten the procurement process. These new regulations need to be monitoredclosely to see how well the turn-around times for procurement processing are improved when comparedto the previous GOK CTB procedures.

-15-

With regard to payments, similar improvements in efficiencies were realized due to a few streamlinednrcedures agreed to during negotiations- Prohahly the mnst signifirnt step taken by CTOK to immovethe turn-around time for payment was to allow the PMU to have the Authority to Incur Expenditure(AITh rioghts This helned greatly in en9 iring that navw-rnts were md,-e on time to the vni-nru,consultants and contractors. While there were some problems experienced in the timely replenishmentnf thp SnPeiail Arcnont fnr thp mnot nprt the nymP.antc werP mArIP in roughly half the timp whncompared again to the IDA financed KUTIP. In the MOP the number of steps required in order toaiithnr'7eP ^1n mA-e navmente U.vp repii-P> fronm t,p neAm.ic nnram,l 1- lum-,f- p. , Tlk0Ministry of Finance should now review the improvements in efficiencies in payments realized underthis, n,n"t &~nd see ,. som.e of toe pr.ced -es-g rriht be adop'e .,_or r.orrl f .n o.aior.without sacrificing the checks and oversight required to protect public funds from being misused.Ther was z uarc_-sa - -nge..r. --s+.. p'ut ir. .A plc udehs --- i to +_ iS assh+e RA4T3 TnA" UtIvc UOl'W CffU41.A OJOSt4*1 FU Ll U. Fl~ ULLtLAUV MIU %. L4Ut LU Aaoa UL L IV.& LYJ LU

monitoring the financial indicators for improved efficiency. Unfortunately, this system was installedq4UiL LaLa, ir UI* jJIU%cL c TU IL JIadU bwII Uir,Lsale erIIeI, *Uhe =I1uiuvraIIulIL WoUIU iiave LP=1I i1iuIr

robust. In all future IDA financed projects, an approved procurement and payment processing systemSILUUIU U, bU FJi4n p LU *o LLULV LLLrb C VUiIVIK)y gair,s.

Leso N. 3

T he financiia anu iechnmica quaririy auduis undertaken by a private audi wini assisieu ihe PiMLugreatly in ensuring that the streamlined procurement and payment procedures did not sacrificeproper oversight of the expenditure of public funds.

Tne role of the independent audit firm played a pivotal and positive role in the professionalmanagement of ENEP. While mandated by the World Bank Board of Directors in approving theCredit, these quarterly financiai and technicai audits were recognizea Dy LwK as an important extralayer of project management supervision demonstrating GOK's commitment to having an efficientlymanaged project. Tne audit firm was hired on a competitive basis and financed from the Credit. TnePMU was able to rely on the technical audit reports to support their positions of quality control. Therewere very few cases where the audit firm and the PMU were at odds with each other in assuring thequality of the contracts. The one major issue of product quality which was not satisfactorily resolvedinvolved the poor quality of work of one of the six zonal consultant firms - one of the T echimcal Units.The audit firm, the PMU, and the Banl's supervision team all agreed on the problem, and for the mostpart on the solution. It was GOK interference above the PMUJ level that prevented punitive actionsfrom being taken against the poorly performing firm.

Given that there were approximately US$ 90 million of civil works investments being implementedunder the ENEP program, an investment of roughly 1% of the value of these infrastructure investmentsas an additional quality control layer seems to have been financing well spent from the perspective ofthe taxpayers of Kenya and from the financiers' perspective. Kenya's poor track record of executingsuch civil works programs in the past is what initiated this intervention. Until a record of betterimplementation is established, it would be prudent to insist on such audits for all similar future civilworks programs. It should be noted that the quarterly financial audits resulted in the timelypreparation of the annual financial statements and of the submission of audit reports. The World BankCountry Office did recognize and appreciate the timely manner in which the audits were presentedsince this project was'almost unique in the timely delivery of its annual audit reports.

For future IDA financed projects, it would be useful to enhance the function of the audit firm toencompass more of the monitoring and evaluation functions that should have had a more prominent

- 16 -

place within the PMU. The PMU was swamped with day-to-day design and supervision ofconstruction functions and consequently the M&E activities were allowed to slip. They were onlyproperly focused on towards the second half of the project implementation. The audit firm was betterplaced in terns of function to undertake such activities on a routine basis which could have easilycoincided with their quarterly technical and financial audit activities.

Lesson No. 4

Improved public relations efforts were made by the PMU to Inform the public of the progress ofthe nrniect This should he adonted for all GOK nroiects but most certainly for all future IMArmanced projects.

The expectations of the Government and citizens of Kenya regarding the assistance for the countryfollouinc the E1 Ninnq tarm events of late 1997 were that the Wnrl w Rank wnld he able tn rernndand operate on more of a relief agency basis, more like UNICEF or the World Food Program are abletn fn11l insa hm.lnar di&q§tirs. No ntnie wair intPrPctPr.A i heai:ricn. 2nhAt the vIiriniic inr- inrpmprntconstraints that come with working with the World Bank, even if they have been "streamlined" for thisoper2ation As a cornsequ e.nce nf these eYnep,tatorne Andi ,.en that th.rp was little pubhlic rel!ti^nnefforts early on in the ENEP preparations to manage these expectations, the general population affectedbyn the ctnrm &..dam.e was AidllngiirceA 2 ard Aicav,inte at the npce nf the prvept'g Aaelieru o,f oitpu,tgTheir disappointment and disillusionment was understandable given the lack of information being made

v.,^ ilhe by .n aa anar,^+A A 9 niqJi.inA.er nd a p YiSO n i *. h16 Viiv,' wVflJZ cor.t -fli.h.I &ndlt corpljJ -,gi therii

within 30 months, is rated as much better than satisfactory, to the people lacking the water supply,,Jealdl roia iiA.:n, id *-oad nethv-tna, +iM- s liO iit_A no zr.iei.%erg i. o rse". T.A.e* lesso n clearly ile&in

here is that from the very beginning of all future World Bank investments, a communications strategy2J1-IUA Ul ajA-_+t A A- ija_ t IJUIA rjiA -+ ..-ir .A , LA-J_ -i : 1 -. Q U 4rXi -A 4A A .A:>sswuv LP. CavvMaov ua%&v *t usw v VAlI% tI tWUs. Au W;W %VaL i nVW6Ir %'IVJ49; LLLVLLIS USL La%

objectives of the project, the intended outputs, and the progress in meeting these objectives and outputsare not significant at aL Qerly advertisements were placedAine nationa l newspapers indicatingthe contracts to be awarded in the immediate future, as well as those which were awarded during the

rLIoL J IIIULIU3n. ILUs seemed Lo bU welU l rVece.IVeU by UIV, pUUL. ic U d hUL'dU be LUIIeU lUL IUL.Ur

operations. As problems and conflicts arise in any investment programs which may impact the outcomeof uIIh oUjecbv &Vend OuLIp'uLs, UJey should be puULIca ly disc:oUILLedU UIUIfo IlJiMUUILL-iUU ULUU ruiuiurtake on a reality of their own in the absence of the facts.

9. Partner Comments

(a) Borrower/implementing agency:The draft ICR was transmitted to the Borrower for review and comment on April 15, 2002. Comments tothe draft were submitted to IDA in a May 17, 2002 letter which have been taken into consideration in thefinal version of the ICR. In their May 17, 2002 letter to IDA, the Borrower has also included their ownICR document contribution (see Annex 1).

A copy of the draft was transmitted to the African Development Bank on April 15, 2002. Comments ontUhe A we suhitted to IMA on May 28, 2002 which were taken into cor.siration ;i the firal versionof the ICR. AfDB indicated in their comments that they would be fielding a Project Cornpletion ReportIL ino W . ma.at av-at - N -- t.t -LUU VW. - % ti a IAJJ %JA UIMi .i1 IL,U I U iL L%L.PI UZI, LAJJ1. I JUL it,ViLiV.W aLIiU

comments.

- 17-

(c) Other partners (NGOs/private sector):

la Ad Sditio ,la:Informatior.XU. txuu1iuuaii ALUJLU IUUUU

N/A

- 18-

Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

lnd.l atok/latrt .il f troje In' ladti,SR ActuallLatast Esimate

OLitnut IndIetnom:

l: ,;r; i; indlcaterlMatilx . .Projecte...d In,lut dSR ;|,i Actulltest Estimate

1(j1 Eonormic acivity reswred in 23 impaaecimpiemrarwioun or 33 watr suppiy co ncis. Uiwrropiraa

dWbicts and the Provinoeof Nairobi thoutgh Rehablitton of 45 water suppl systemsano 1 sewerage sysem.

(ii) Increased accessibdiltv through Implementaton of 23 fural roads and bridaes All Comrletedrestoravonilimprovement of roads In the contracts.nonurban areas. iRehabBltation ari reconstruction d 1.634 km

of gravel roads and numerous culverts, drfts,and bridges.

(iii) Minimized the loss of human lIfe through lmplementation of 54 heasth fadltles 52 Fully Completed, 1 Partially Completed|restoration of health fadliles. contracts. 1(32%), 1 Not Compltedd tAll -Contract

I IRehabilltatlon of 112 heath facllibes. Terrdnated.

(lv) Increased acoessibility through lImplementation d 8 urban roads contracts. |AIl Completedrestorator/improvement of roads In urban

1aras. Rehabiltatlon and reconstruction of 67 km of|0,00, Ibirumen roads In six urban centers.

Frdof poj,ect

- 19 -

Annpe 2. Proiect Conts and Financing

Priect Cost bv Comnonent (inUJSS million eqiivalent _

| ' | Aptpraistal | ActualLatestp |- aPaercentage ofI I ~~~~~~~~~~~~~~~~~Estimatei - Estiima'te Anoria

Civil Wnrk 0 -rojct"Cost By:C,omponent US$ million US$million |r ivil w. oriv for:

-Roads and Bridges 18.90 17.99 95.2"I-[~.. I - CA 17 1 0 AC '.

I-- WaVLr Sujppy I .J5 1 1. 10. 1

--- Health 3.80 3.44 90.4Consultant Services 4.50 4.85 107.8Audit 0.30 0.86 285.8Goods 0.70 0.39 55.2Operating Costs 0.30 0.78 258.7Unallocated 4.00

otal Baseline Cost 4U.UU 35.49

Total Project Costs | 40.00 35-49Totai Financing Required 4U.UU0 1 35.49 1

Note 1: The table above presents the disagregated project costs rather than baseline costs. Given the complexity of isolatingthe pnysical and price contingencies from 1 16 civil works and 2 goods contracts as well as the price contingencies from 15consultancy services contracts, it would have required a considerable amount of staff time to provide this disaggregation. Itwas deemed not to be a cost effective exercise for the value of the additional information gained fmm the disaPpreeation ofbaseline costs and actual contingencies.Note 2: The Special Account still shows a balance of $ 286,042.11 as of June 17, 2002. Based on past experience, it may takeGOK a considerable length of time to refund this SA amount to the Bank. The Credit would be then be closed and all projectfinancal figures finalized at that time.

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)1 11r r ' t ' 1- Procurement Method,Expenditure Category ICB N.B.F. Total Costy JC ~~~NCB Other 2 ______ ______

ri. Work(s 16.20 14.70 2.70 0.00 33.60(16.20 I (14.70) (2 .70 I (0.00) (33-60)

2. Goods 0.30 0.30 0.20 0.00 0.80

3. Services 0.00 0.00 5.30 0.00 5.30

(0.00) (0.00) (5.JU) (0.00) (.30j)4. Operating Costs 0.00 0.00 0.30 0.00 0.30

_______________________ (0.00) J (0.00) 1 (0.30) 1 (0.00) 1 (0.30)5. Miscellaneous | 0.00 0.00 0.00 j 0.00 0.00I____________________ (0.00) 1 (0.00) 1 (0.00) [ (0.00) (0.00)

6. Miscellaneous I 0.00 | 0.00 | 0.00 I 0.00 0.00

I_______________I______ (0.00) I (0.00) I (0.00) [ (0.00) I (0.00)Total 1 16.50 i 15=00 1 50 1 000 4.000

(16.50) J (15.00) 1 (8.50) (0.00) 1 (40.00)

- 20 -

__l__qA & L.. 1 cue n _ u, ,,s I A--.------ 6-IAI.611 6-, C - %1661 IIutAU ;11 ; 1QIvr-FWv,Jv.&,,vato myrW"| | ;X,,Wge| vlow L P%11kW111011L kP%.U 11;V0 ;alh.%1100 k% W ,l11MlVl l W74UVU91L>ll||}, ,,

1. Works 13.32 14-94 f 0.35 1 0.00 2861

1 (13.32) (14.94) (0.35) . (0-00) (28.61)~2. Goods 0.32 0.05 0.02 0.00 0.39

______________ (0.32) (0.05) (0.02) (0.00) (0.39)'3. Services 0.00 0.00 4.85 0.00 4.5

(0.00) (0.00) (4.85) (0.00) (4.85)4. Operating Costs 0.00 0.00 0.78 0.00 0.78___ ________ 1 (0.00) 1 (0.00) _ (0.78) (0.00) 1 (0.78)5. Miscellaneous 0.00 1 0.00 0.86 J 0.00 0.86

(0.00) l (0.00) l (0.86) l (0.00) l (0.86)Miscellaneous 0.00 0.00 0.00 0.00 0.00

_0.00_ (OOr 0 I (0.00) (0.00 I (o.OrnTotal 13.64 1 14.99 6.86 1 0.00 1 3549

II. AA i (1A ) Ofl I(Q6.8 I A An0 (54 -t

5. Miscellaneous are the charges for the quarterly audits.Figures in pare'hLesis are uoi an-uunts 1o ob nnanzced oy *e1 IuA Credit. A;; cosEs inciude contingencies.

2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staffof the project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

rroject rinandrng Dy Component in U miiiion equivaien _

|4jj~fl Appraisl~A~~ I ~ f Percentage of Appralsal

*__';.:;_.: Govt. 4 CoF.. ' | lA Govt. CoF.. IDA |-Govt. COF-Civil Works for:

|-Rural Roads/ Bridges 18.90 0.00 0.00 17.99 0.00 0.00 95.2 0.0 0.0Water Supplies 7.50 0.00 0.00 7.18 0.00 0.00 95.7 0.0 0.0

-- Health FaclOties 3.80 0.00 0.00 3.44 0.00 0.00 90.5 0.0 0.0Consultant Services 4.)U 0.00 0.00 4.85 0.00 0.00 107.8 0.0 0.0Audit Fees 0.30 0.00 0.00 0.86 0.00 0.00 286.7 0.0 0.0Goods 0.70 0.00 0.00 0.39 0.00 0.00 55.7 0.0 0.0OperatIng Costs 0.30 0.00 0.00 0.78 0.00 0.00 260.0 0.0 0.0Unaiocated j 4.00 U0.00 0.00 U 0.00 0.00 0.00U 0.0 j 0.0 j 0.0TOTAL 40.00 | 0.00 0.00 35.49 | 0.00 0.00 | 88.7 0.0 0.0

An additional US$ 37.5 million of financing from the World Bank was reallocated from the UrbanTransport Infrastructure Project (Credit 281 1-KE) towards the El Nino Emergency Pro for therehabilitation and/or reconstruction of urban roads in Nairobi, Mombasa, Voi, Malindi, Kisumu, andGarissa. A Development Credit Agreement amendment to Credit No. 281 1-KE was signed on July 28,1998 earmarling separate disbursement categories for El Nino emergency related civil works (US$ 32.3million), consultancy services (US$ 5.0 million), and operating costs (US$ 0.2 million). A separate specialaccount was established for these purposes as well.

- 21 -

During the preparatory stages of the El Nino Emergency Project, funding from the Institutional SupportProject (Credit No. 2671 -KE) were made available to bridge the financing gap until the El Nino EmergencyProject became effective in October 1998. Expenditures of KSh 27,514,945 (USS 445,300 equivalent)were made up until early 1999 for the purchase of vehicles, computers, office equipment, initial salaries forthe staff of the Project Management Unit (PMU), and rent for the PMU offices. There was no DCAamendment made to accommodate for these El Nino Emergency Program expenditures nor any change inthe special account arrangements.

There was US$ 15 million equivalent in parallel financing from the African Development Bank towards theEl Nino Emergency Program. Later, in July 2000 and January 2002 a total of Euro 28 million from theThe Agence Francaise de Development becamne effective for rural roads and water supplies as well. Detailsof this financing are found in Annex 9.

-22 -

Annex 3. Economic Costs and Benefits

Not Applicable for Emergency Operations

-23 -

Annex A4 'ank Inniuts

(a) Missions:

I Stage of Project Cycle No. of Persons and Specialty Performance Rating

(e.g. 2 Economists,1 FMS, etc.) |Implementation Development

Month/Year Count Specialty Progress Objective

IIdentification/Preparation IIIIFebruary 1998 1 Country Director

I Sector DirectorI Sector Manager

AppraisauiNegotiationApril / May 1998 1 Country Director

3 EngineersI Financial Management2 SpecialistI Operations OfficersI Disbursement AnalystI Operations AnalystI Procurement Specialist

Lawyer

Supervisio January 1999 I Sector Director S SI Sector ManagerI Lawyer

Operations OfticerFebruary / March I Team Leader U Ui999 3 Engineers

2 Operations Officers

lifMy 179997 1 IN TeilLJui S S

3 Engineersll2 Anl rpe:ns AffirlprI

I Operations AnalystINvember 1999 I Team Leadler S

3 EngineersI2 Operations OfficersI Operations Analyst

February /March |I Team Leader S S2000 3 Engineers

I Financial Management Specialist

2 Operations OfficersI Disbursement AnalystI Uperations Analyst

May /June 2000 | Team Leader S S2 EngineersI Financial Management SpecialistI I I-aonsOfftern11

I Operations Analystl-ptehPr I/ Tpnm T lpeIr S S

October 2000 2 EngineersI Financial Management Specialist

-24 -

I Operations Officer jFebruary / March I Team Leader S S2001 1 Engineer

I Financial Management SpecialistJune 2001 1 Team Leader S S

1 *EngineerFinancial Management SpecialistO psa'utriof Officer

November 2001 1 Team Leader S S

I Financial Management SpecialistI Pmrurement Snecia1iRtI Disbursement Specialist

ICR No ICR Mission

(b) Staff:

K Stage of Project Cycle | Actual/Latest Estimate| | ~~~~~~~~No. Staff weeks |US$ COO0)[ Identification/Prepartion 36.3 | 107.3.7

Appraisal/Negotiation I 24.3 I 23.7Supervision 155.6 128.7ICR 7.7 24.6

| Total | 223.9 | 284.3

-25 -

Annex 5a. %a.ULMga JUo Achievement UI Oie-LVes/O-ULpU UI ofUUCompoCneL

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

OI Macro policies O H OSUOM O N * NALI Sector Policies O H OSUOM O N * NAO Physical O H * SUOM O N O NA

LI Financial O H OSUOM O N * NA3 Institutional Development O H O SU 0 M O N 0 NA

Ui Environmental O H OSUOM O N * NA

Social3 Poverty Reduction O H OSUOM O N O NA

1S Gender OH O SU * M O N O NALI Other (Please specify) O H OSUOM O N * NA

12 Private sector development 0 H 0 SU * M 0 N 0 NAF Public sector management 0 H O SU 0 M 0 N 0 NA

IOther (Pleasespecijy) OH OSUOM ON * NA

- 26 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bankperformance Rating

Z Lending OHSOS OU OHUI Supervision OHS OS OU O HU

1 Overall O HS * S O U O HU6.1 (a)6.2 Borrowerperformance Rating

t-,%. A& & 0% ry0%mi^Preparation O,- HSa O S , O \U OAU2 Government implementation performance 0 HS 0 S 0 U .0 HU

l Implementation agencyaperformance * H.S 0O 0 O ' 0 itZ Overall OHS OS O U 0 HU

-27 -

Annex 7. List of Supporting Documents

I. Memorandum of Recommendation of the President Of IDA to the Executive Directors2. -. t ' A t A- -+.4.

3. Technical Annexes'4. 1v1.U-u 0I "f , VULUrPb

5. Civil Works Site Inspection Reports6. bi..1vU VT ULb woiuss n I..ACbs rbUIa

7. Civil Works Bidding Documents8. Civil work dIU nvaluaton Reports9. Civil Works Contract Agreementsi o. Consulwancy Services Contracts Agreements11. Technical Units Progress Reports12. Technical Units Final Reports13. Report on Evaluation of Actual Outputs14. Report on Evaluation of Quality of Structures and Facilities15. Report on Project Social Impact Assessment16. Technical and Management Audit reports17. Financial Audit reports18. IDA's letters of no objection19. Aide Memoires20. General correspondence in the project files

-28-

- 6z-

I I_,l l ol __ _ L lO., I

",4aaa, Io-ai Iaa.-o-St la&. I I -ml qI Ii woasal D PM..O . o t D_ W I

n¢r I= I=rrs lvs= |L I D I D "A|DIUI I II 'm' k'sl' .1. 'P - mtrsl ...I i DadI 1Oara Ia-t. -o I- IDI W 01 mn W'i twwI.ll D1I _o

6W61ILIt 6a.,oIr a6-orit W&9.Ia wod WaPl mw 'tattm --ml "ZO a ol I I

PT4 W ILLE LL I t L | iT a I0a63 !LOD)|ysf___ |rm-Wr ___l | r | | IW | P t nl0 1 .P I$aa IN is |

00(00(50 o-60o-t a|.-IZt welIrl oo&|a-IN YPPI W .ol'tD W~L "' iz{ o m I NaDa| 1

I"IOI I. I It . Im It _Nil I'E

1 I7-SIdw1IT T 1I 1 1 1T I dl

oo l l ltm ~[ liffl 1* -a lw o- I Zi pn .A I 5- M 1t Id I'LI' I 1

I I I I I I I _ _I-I_ i iL8I -Iii I I

teetisl~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tf I lVlt.a

cial |Lt"I L toq L - IS 1I )0-1Wl 1-D 9I YosIfl LIdltIn

11-,6 1|trot 6 100th" k"o S Iro !-qM 'P ,.| ,ft0l R'O III

9L600(09l Itro II-, lo|s Itl t1.Lt I 1 i mW l -91) (699S ni I ,t

ftORft lalal INu dw ~ t4 0 4 99 v o asLtAiit K L-uLiOj .1 * i

56(10l(t 1ra.ba1 I I4O4SWl I -"I r9 B9-o0 WI 0 Iw n W1 0 IIqPL n. IO U I I

oootft(tl ta-tools a-tao*tc iaaqCi ao-~a-Li 006010991 001 64,1* I au 'M i-A 01 an lu |1

600"6 II6 low00. l W-"[ lo- " 0 11 1| 041 WI 0 t Oll wool t2 Wo"a, q a ot1| |I

CatL S a- law I 1 1 I r T r LI

alson AorAl O.- 95a t-O0L Iadl. o9aq p,ayr -- , as9 laq~q~ 1 I oum sue u- po--S p|--P aO*D WS-t.. |- | .-- - |M - . YT T n .I |%f

tttW O | o90t 19-.-01t Wl00O |0YI Al R )0 01 0WOL.3 .watt SHIL a| IL10 l4 l I 1

oxIoo0n I90l-e WIa[II 4 09999 1 | 1 1aa|L a10P - 11 Y ata I1I l l l l l l~ ~ ~ Ual. .11)1"

or !B010 r0l'01 I ato-lI z I0-1J-L c-oAlo dat A pu 3 lm a3 mm10 . loo |oafaid ao.o paa 6| |

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1tv( i.m o- sn -00xau vuip

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21~ ~ ~ ~~~~~G Ipw# iiRwsKAf.O li-- K i 4.494.06 3.10.01 24-470] NmnlLnl !i7.f

271 |_W43 1b I| _ IW _ _S I - I _ _ l I_ t z.050

$"PO 36k~~~~~~~~~~~~~~~~~~~~~~~~~747 9a

gS_ToOsaV.ITS PPb l l l l l l |~~~~~~~~~~~~~~~~~~~~~~~~~~~ uss| 7.209g7

960 I . -4 4--. l ~ l l'~ I p696

I I I1W05A 04 A M O r 00.1I 10.4. JK I 2S j 7 51P4 1 J l4

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3 1 9 M.A JK96444090 T.$l6M 6.doo0.40C 4046. 70-1 1-4.1 1.9 4240 .32,323

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nl 340

I I I I I I I I I I _ _ _ _ 37, 039

- 30 -

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S P.M* 51 |LI1LS I 1 l a l ou Wu|

Additional Annex 9.Pr oject Costs for AfDF and AFD Parallel Financing

The following tables detail the parallel financing which was made available to the Government of Kenya bythe African Development Fund (AfDF) and by the The Agence Francaise de Development (ADF) tosupplement the interventions required in order to repair and rehabilitate roads and water supplyinfrastructure damaged by the El Nino storm events. The AfDF loan for rural roads and water supply civilworks contracts utilized the consultant services provided for under the IDA credit Since the Frenchinterventions were initiated considerably later than those of IDA and AfDF, they emnployed their ownconsultant services but still maintained the management of their investments through the same PMU locatedwithin the Office of the President.

For the AtDF Loan -

Loan No. F/KEN/INF-REH/99/26Effective: September 7, 1999Closed: December 31, 2001Amount: Units of Account 11.52 million

Allocation in |Units of Account I

|Component (UA) - Mlillion |Number of Contracts I

Rural Roads 5.72 11Water Facilities 3.71 15Equipment l 0.171 N/A|

lCommodities | 0.131 N/A|1Unallocated 1 1.791 N/AI

I Iotai UA -miiiion) I 11.521 IITotal (Equlv US$ - million) 14.971

For the AFD Loan -

Credit Facility Agreement No. 1007 01 FEffective: July 4, 2000To Close: December 31, 2002Amount: Euros 15 million

Credit Facility Agreement No. 1016 01 FEffective: January 17, 2002To Close: June 30, 2003Amount: Euros 13 million

Allocation in 1Component Euros - Million Number of C

Rural Roads 1 16.10 19Urban Roads 3.10 6lWater Facilities 4.301 7Consultancy Services 2.001 11

1Other Expenses - Audit, l

IAaministative Costs 0. N/AlConfingencies 2.151 N/At

Total (Euros - million) 28.00___,,_______________________________________ ___________________________________ ITo tuI Equiv U@f - EIIIII0IIj I

Additional Annex MO.E NEP Accelerated Procurement Processing Analysis.

The following table and chart compares the procurement turn around times for the ENEP civil workscontract-s copd toa si-1., cix,Z- I -- tn-ra-ts, Tn A rreait t+ha TYnCtya rrrbar. Tvrncr+... F--v ~ ~ ~ ~ ~ AL L . J.f wwt.Infrastructure Project. The comparison is the time taken from the time of advertisement of the contract

uu il the iss^.ce of toe letter of awaJ ~ ~ ~ e SE _

1 01 01 .1 21 i1 il ° mU'I.LU LLV.A iooojn~ t/5 t n u r! *a tin n n ° E |, nn Ii

Y.--.-. ~I z IY U U I I w I

Advert to ContractCommenrment 409 197 1951 1931 541 231 57,

Numberof Contractsl "| 81 231 271 61 471 91

* the healthfacilities show 47 contracts instead of 45 contracts because two were cancelled and retendered,informzationfor allfour contracts are included in the data.

Comnnnrinn nf ENEP and KUTIPProcurement Timellnes

400 -r

E 350flC 300'

E e = L Es

o ; 150 _ _ _ _ _ _ _ _ _ _ _ _ _

0 -so- - - -U 0 'a CD

E w cn ag e _ZY in {Y z u8 L

@ U LU M v U Lus ; -e FM 1 _ - . . _) -

P 'Ject and Sector

- 35 -

Additional Annex l1.Bo rrower's Contribution to ICR

EL NINO EMERGENCY PROJECT (ENEP)CREDIT NO. CR 3120-KE

IMPLEMENTATION COMPLETION REPORTGOK/BORROWER/IMPLEMENTATING AGENCY CONTRIBUTION

A- r(VNW.R A. nRWCTWVW

(I) Im- gener-al oviectv of - h E1+U Nir,o- ------- roe:wa orstr rirtze iak\1 J AUV L..G UUJ LUVV, VLU U11% LI i'4" 1iLLLJ. LIVJVIAL W4aO LU LLULV JPIViUiLLILVU VIU2I

infrastructure and facilities that had been adversely affected by the El Nino floods in parts ofKenya.

The specific objectives that focused on the Roads, Water and Health sectors were to:a) reverse life threatening situations.b) restore essential human services.c) restoration of vital economic functions and lifeline roads to cut off areas.d) protect economic assets at risk.e) establish an efficient snpedy and transparent management and impnlmentation

system to carry out the above objectives.A\ es+MUl1;Sh1 U-_ p=V A;a* -Ok- p- +UA -9-+-;{X^xI) AVA.p ASA.1IVALIA0II LvL r Uhe I1JUIP.V.IL VI k_J CLUI V L.

g) create a significant number ofjobs during the project life.

(2) Project ComponentsThere were three project components (sectors):-- Roads, Urban and Rural-- Water Supply and Sanitation-- Health

B. ACHTFVEMENT OF THE ORIECTTVES

(1) In the roads sector, eight (8) Urban Roads and twenty three (23) Rural Roads contractswere unucdarzk amuu LUW ilULIUwing UujcLLves aioung ULiers were aciiuveU:

a) Restoration of essential social economic services such as transportation ofagricultural inputs and produce.b) Restoration of motorized commuter services.c) Reconnection of affected rural, urban, commercial and industrial areas.

(2) The eight (8) urban roads contracts were undertaken in six urban centers namely, Nairobi,Mombasa, Voi. Malindi. Kisumu and Garissa: and twentv one (21) districts benefited from thetwenty three (23) rural roads-contracts.

(3) The scope of urban roads contracts in Nairobi and Mombasa were reduced from 25.32 km

-36-

t,o 20.78 km (17.9%) and firom 33.!9 k1m to I8.26 km (A4.9%) respectively to avoid cost ov.errunsand were completed on schedule. The relatively high percentage reduction in Mombasa was dueLU LUC 1WALUIdL 17.03 kr.il VI roIau ihad Lrunuiu4I d-,Lnage aun e wuior ilenU d were pe,IIoic

maintenance while 7.1 km of road had little traffic volume and again minimal damage. The ruralroads contracts were managed within the budgeted provisions of the project.

(4) Although funding was not enough to undertake all the damaged infrastructurecountrywide, basically the main aims and objectives of the projects were successfully achieved inthe roads sector.

Water Sector(1) Tn th,e Water sector twenty-seven contratst were u-ndeprtaken spread over twventy two (22)districts. The following objectives among others were achieved:

a) *a,.aLLge w ate; fac.iiie Iesto,wd andI ini wo,-'-:.-, UIde.LI

b) Provision of potable water from the water facilities.c) Reduction of reiiance on poiiutea water sources.d) Reduced travel distance to fetch water by women and girl child.e) Reduction in prevalence of water bome diseases.f) Improvement in living environment and coverage of 45 water facilities in the

affected districts.g) Provision of hydrological equipment to restore the river flow measurements

instruments lost during the El Nino rains.h) A total of 45 no. water facilities were covered.

budget provisions. One (1) contract out of the twenty seven (27) however did not fully achievethie obJectives due to uuavrse natural conditions in Hadado/iBute because of the poor quality andquantity of ground water sources.

(3) Due to budgetary constraints only 25% of the deserving water subprojects identified bythe beneficiaries were rehabilitated.

Health Sector(1) In the Health Sector. we had fortv five contracts snread over twentv four (24) districts.The contracts achieved the following objectives among others:

a) )amacrpAg hiildgncra aniA hx.a1th f were rpieA rA16i01tted and *n some

cases reconstructed.b) h ,ENEP U1 LVenUU0u iiipiuvcuil u u nVUiUUro eiL -Und[r W-LhLch LUC IIheUU[ hUc services

are delivered.

(2) A total of one hundred and twelve (112) health facilities were rehabilitated and restoredunder the project. Most of the health contracts were small and located in remote locations andwith inadequate budgets. This strained the effective management of these contracts considerablyin terms of logistics, design, funding and supervision causing implementation delays in somecases.

- 37 -

(3) The overall aim and objectives in this sector were achieved and the completion of projectshas had a significant impact on the beneficiaries all over the 24 districts.

(4) Two (2 No.) health facilities, Voi District Hospital and Nyang' ande Health Center, werenot completed due to poor Contractor performance and were terminated at 32% and 0.5%completion respectively. It is recommended that the completion of this work be considered underdifferent financing.

Macro Fconomic Policies

The project did address the macro economic policies of the country with added employmentoppo,. s,ties in tfle aIi,ec'.ed #AOtn J.ts,I,n ir.prve road . a.sa.iaapot net Ifll zrf.d reduc ~itoniiuiA Uin T. water

bome diseases.

C. MAJOR FACTORS AFFECTING THE PROJECT IMPLEMENTATION

(1) Factors Generally Subject to Govemment Control:a) ENEP was a pilot project for the country with stringent procurement, managementand financial rules and regulations agreed between the Govemment and the Donors. Theinitial institutional differences between the Project Steering Committee and the ProjectManagement Unit led to unnecessary implementation delays and the replacement of thekey seconded staff led to further delays. The project had to be put on hold until furtherclarifications were received fr-r. TfA - nd d iuio.-ns hldl to resole1 th. irn1 am.ntotnn

process. These caused unprecedented delays that were beyond the control of the project

(2) Factors Subject to the Controi of Impiementing Agency:Lack of stringent control of a few known poor performing contractors (known to some secondedstaff) led to poor/non performance.

(3) Sector Policies:a) The sector policies in the roads sector were followed and the project did improvethe road network in a short time span. In the rural sector 1420 kms of roads wereph!_hi1itAtP Ain 71 A itritcA nntA in thF lurhAn r.pntprg 7T kmc nf rIAAtc vL'PrP rp'nn trir.tptA

and rehabilitated in the eight (8) urban centers.U) LJe pUrojeJLL LULUIUULVU bir,1ificLaUUJy .o uiV reaizatLion oi U'v WaLte sorvt4U p01olcy oii

the provision of portable water within reach of most Kenyans.c) in the health sector the incidence of water bome and water related epidemics werereduced and the focus on the rehabilitation of the health facilities achieved.

(4) Financial Objectives:(i) The financial objectives of the project were to ensure that:

a) The proceeds of each credit have been used in accordance with theconditions of the Credit Agreements with due attention to economy and efficiencyfor eligible e1 pendies

- 38 -

b) The works, goods and services financed under the credits have beenprocured in accordance with respective credit agreements.c) All necessary supporting documents, records and accounts are kept inrespect of all expenditures including Special Account payments and expendituresmade on the basis of Statements of Exnenditures (SOEs).d) The Special Accounts are maintained in accordance with the provisions ofthe respective cret agreerr.ents.

e) The accounts and financial statements are audited on a quarterly basis; areprepared in accorduance wiAh T-Us sL Aly sppied Iieriiai Acco-unLig

Standards (IASs) and give a true and fair view of the financial situation of theProject as a whole.

(ii) All the above objectives were achieved.

(5) Management of Finances:a) One of the objective of the creation of the Project Management Unit was to ensurenromnt pavment to contractors- suppliers; consultants and other service nroviders. Thiswas primarily achieved in most cases.W T ii, mra Aal t,s wire n',n ar,pnpA in aattlam nt f naximo nte Aiia tnr tha hnish lam,pl0, . 7VET_._.s _V JU ..a, _A_d_*__ ***flAO[~%~tfl*% ~ U i V Op m W -*- Lv *

threshold set for direct payments and the turn around time needed for requisitioning fundsPrun uie Special Acur,ts .o uie pru t Kenya u rng TJperu1 ng A

c) The Project Financial and Technical Management System "Powerworks" asprescribed by the Donor could not be fully utilized due to its limitations. Moreover theconsultants who designed the system were not locally based and as such any changesrequired in the system were difficult to implement. In addition we did not have the sourcecode to the system.

(6) Institutional Develonment:a) The PMU staff seconded to the project have acquired valuable experience in theadiminintr2tinn nand hnnAlina nf emergneu nrnipcts nf n similar natilre in th. fiitilre

b) The creation of the District Disaster Committee (DDCs) and the activeP4LL1%ALF 01V J UiVbr %I.1UIIUIULV=b a11U %,U1LL11ULUY 11UVILIUV1D ILL UIV ~1UJ1VL La %;1 V&ILVUai

new awareness of ownership of the projects undertaken in the affected areas.

D. PROJECT SUSTAINABILITY

Project sustainability can be split into three sectors.

(1) Implementing AgencvThis calls for a design of a project that renders itself easy/practical to maintain and implemented assuch.

I LiL Wds 4ach:VVeU WIULLII UIe VuUrUUay 1lUILaU11io dUan WiUL eQL1pU4b1b oVn esy LU rLmainaLUi

drainage structures in Urban roads where drainage is a problem.

(2) Beneficiaries

- 39 -

The project was designed and implemented to blend with the environment and be acceptable tothe beneficiaries so that they are not hostile to it (e.g. blocking drainage, vandalizing water pointsetc.) and they (beneficiaries) need to be constantly involved in proiects to maintain this essentialacceptability.

(3) The Agencies responsible for infrastructure have the long term responsibility for

Apart from a few cases of -business as usual" negligence, we wee no problem with sustainingthese rehabilitated infrastructure. We must however hasten to observe the severe axleoverloading witnessed in the northern and eastern Corridor roads. This is road destruction and nomaintenance or even rehabilitation short of reconstruction will sustain them.

E. BANK'S PERFORMANCE

f(1 Prnippt TAPntifip2tinn 2nrA Prp,vrntiaxI o- J L di E

11WC project was idUenifidU by Jovern-IUInt ar.U dL LacpedU Uy LUI LJUIDUn. 111 proJec;L prIpC1aatLiUo

was then carried out by Government assisted by the World Bank team from both the local officeand Washington.

ENEP was an emergency project and the Bank accepted the proposals for the rehabilitation ofinfrastructure worst hit by the El Nino floods that had been declared disaster zones by theGovernment.

(2) Bank's performance in Project Implementation(a) Once the initial start Up prnblems had hbeen overcnme, the Bankc wa vervsupportive to the extent of providing additional staff at the local office to help the PMU inmluvulg 'L% pLJ.ec4t especi-ally JuL. uL1 VolL..I.-.us dcuL...tUJijLatinLL per.od in Le Pa

Sector.CD) Tne Bank through its mission in NairoDi had staff who monitored the day to dayrunning of the project through the PMU. Most of the issues were reviewed and resolvedin Nairobi. The Bank sent a quarterly supervision mission from Washington DC tomonitor, evaluate and review major project issues. These missions were particularlyhelpful in resolving issues.(c) There was a slow lap during the transition of the Bank Task Management but thiswas short lived and the tempo were back to speed.

F. BORROWER'S PERFORMANCE

(1) Performance of PMU and DDCsTlne performance oI hne PMU nas been satusfactory nesiues a iew instututuonal drawbacKs min heinitial stages of project start up. The DDCs identified the subprojects from the affected districtsand prioritized the subprojects in all sectors for PMU's acceptance in line with the availablebudgetary provisions.

-40 -

(2) The participation and active involvement of the DDCs especially the District Commnissionersthrough the Provincial Administration and Sector Ministries in the project implementation isnoteworthy.

Performance of GOKA 4 4er 4-,o in iti! iia1 A,ae,hacks, the 1-OK gavle nAvvn,r srntvlr4 to the pro,c

implementation and its successful completion.

G. ASSESSMENT OF OUTCOME

(1) A total of 129 subprojects were undertaken in the three sectors with IDA and ADFCredits as follows:

(a) IDA Credit 3120 KE, 95 contracts, 45 in health, 23 rural roads and 27 in waterand sanitation.(b) IDA Credit 2811 KE. 8 contracts in Nairobi (3) Mombasa (1). Kisumu ({) andGarissa (1) Vol (1) Malindi (1).(c) AThF Credit, 26 coir.tracs !1 ir. rua! roads ar.d 15~ in ai,ter nar. sanitot.ion

()I UW eJ pL UUII.oU11oV was baL1b1a.acLV1y UU andal LL aUUVe uubproiUJV6 weVr UllpiCiliViLLvU anu

completed as planned (except for the two health facilities mentioned earlier) according to thespecifications and within the oudgetary allocations.

H. FUTURE OPERATIONS

(1) The future operations of the PMU are considered limited. The IDA and ADF Creditsexpired on 31 December 2001 with closure of financial transactions on 30th April 2002.Procurement for the implementation of the AFD Component of ENEP has commenced and theA1Rfl rrpdit will tYnire on 'A !Tserbmher 2002 whilp the Anlmeirp nffinanwisl trnnvirtinne will hp

31 st March 2003.

(2) The PMU was set up to undertake an emergency project with private sector participationand seconded tecnnicai staif from the line ministries. in order io generate efficiency andtransparency in the project implementation, a new set of procedures and regulations were put inplace outside the laid down Government procedures. A similar set up and procedures may beapplied to undertake emergency projects in the future for quick response and delivery.

(3) Once the current proiect is complete, PMU structure may/should be replicated in lineministries for continued development and rehabilitation works in the respective sectors since it hasproved an effect-ive way of Project Lmplpmentatinn

1r VQQt%WQ 1 A D1NTs:J - ZV1 .SJEzIV a I

Tnroughout the period of implementation, we have iearned some usefui iessons and we Hist themhere below in a process sequence for the benefit of other/future Project Planning/Implementing

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Agencies.

LessoQn 1

The Project Steering Committee

This Committee has performed its role as a policy Steering Committee. It however had someshortcomings in that:

Not all members have been actively involved. This is expected given the level of commitment ofPermanent Secretaries.

It has in some occasions taken over the role of the PMU with the result of lost time without valueadded. This could be attributed to lesson No. 2 on seconded staff.

On other occasions it did not take and/or acted contrary to critical advice given by the Project1ViauaSSlmlin Ulluii LJVIIIuua1 U all. M111. iu UUViUUbly pUt l ui l1UJVLt 1Vi41JAgSi1IRlL uia

awkward position, exposed and with detrimental effects on the Project.

Lesson 2Establishment and Performance of the PMU

The level of Secondment Staff varied from sector to sector and this to some extent manifesteditself in the sector performance.

It would appear that snme Seconded Staff were posted tn the PMUI on arormund nther than merit.It has also been observed that while the seconded staff were Sector Technical Specialist some didr.ot e.Ijoty uil luf confidence of S eix liJ nei r.isties as attes'.ed My CIR I1 t1he li ne0I UW, rILt, 1.1111l,sI.

It is recommended that Senior Seconded and other Staff should in future be interviewed by thePSC with ute Project Manager aiter his appointment. At this stage the roles of the SeniorSeconded and other Staff would be defined and avoid the potential of divided loyalty and conflict.

During implementation, the monitoring of the consultants' and contractors' performance by thePMU/Donor and auditors to ensure quality, quantity and timely delivery of services of theirservices has proved to be necessary.

Consequentlyv future PMIJs need to be structured with adequate technical staff to check, verifyand challenge the technical consultants on documentation an accuracy of ground conditions toavoid .acmanaf- in nr-oJ-t scfo- and to r.n-inime n.-oot rana .

Lesson 3

DDC Involvement

The District Disaster Committees were involved in Project identification. However, with timethey realized that they would not be involved in procurement and direct management of thecontracts as they had imagined after having been involved in the identification. This led to some

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degree of loss of interest and apart from the District Commissioners who chair both the DistrictDisaster Commnitteej and the District Develonment Committee (both DDCs) and the SectorMinistry Officials (who are also members of both DDCs) the other gradually became observers.I ns apatny -A.es to be Asnso...A

Lesson 4Consultants (rUs)

SelectionThe selection and procurement of technical consultants should in future be done upon a thoroughassessment of both specialization and resource capacities.

Contracts

The contracts should have remedial measures that allow reduction and addition of work without*1'.a employer Y. 4fermn -loss of r.gts

Lesson 5Project identification and Scope

Once projects are identified and the scope determined, these should be documented very clearlywith all the stakeholders and particularly the DDC's and Line Ministries so that variation requestsare mininmized. This will also reduce subsequent criticism from uninformed new members of theDDCs and beneficiaries/public.

Lesson 6Funds A llocation

apparently lead to inadequate funds being allocated to needy projects in areas that are not denselypopulated, and hence less than adequate and short lived rehabilitation.

Lesson 7Financial Arrangements

Credit Agreement

The Credit Areem.ent was sined in SDR instead of USD. Fluct lations hetw een the SDR an.d theUSD in the course of implementation favored the SDR. Consequently the Borrower lost USDI £I ,, , 1 :_ TTCT'T AA. .._1__.. '..J. 1 yr,n v TTCOTh n 0 C .- .___LL.UUI UUL U1 UI; UVIrJU4IU LJOJ tVIII UUUVI JAUL 314U-Z 4UU U OL.L U.OJ1I UUL Ul UW UtigUli

USD 37.5m under Credit 281 1-KE. The Credit should have been signed in USD or else theDonor should bear this loss while the Borrower repays the USD made available.

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AccountsDue to Goe.-.e, ID-la.;-rs she- PMAT T co1 A-- not + opeat teScia Accou..t0 (A) zr,d r,zkeVW E0 '..J UV Y MMMARi AXl~5 L4UliUX10, ULI%. I IVI'.J %L.JIU ILIUL UjJ%A aLl. LUIl, 1)JP1L.1a1 rF1%AuUL kor iI a i1udaftv

payments in Dollars. This has been operated by the Treasury and the Central Bank. The PMUoperated their local currency Operating Accounts. Tnis resulted in:

For the losses in transfer of funds from the Dollar SA to the Local Currency Operating Account -amounting to approximately Kshs. 25 million. The Government should consider revision orwaiving of the inhibiting regulations to avert such losses.

Lengthy procedures in requisition of funds from the Special Accounts (SA) to the OperatingAGGO11nt ThiStonkanaverage of one 2ndA2hRlf months while ounr anvmten to Cnntrwtnrs and

other service providers were to be effected within 30 days. The process should be reduced to twoVY.l.4A if?J 30 ayayy zLrL e LU iLLVJiJt b LroiUied. .11,e zalMiJIaL wIoV UUILL Ube Lt inLcrease2 U1, payniv'ut

period to 60 days to match but this would be more costly as bidders would price for it.

The thresholds put by the Donor for Direct payments of US$300,000 was on the higher side andresulted in almost all payments being made locally. With the lengthy process of transferring fundsfrom the Special Accounts to the Operating Account, this meant more delayed payments. Thethreshold should be considered at US$50,000 in future.

Insufficient Budgetary Provision for the IDA Credits in the annual GoK Budget resulted ininahilitv to acceRR findR in the Snecial Accnunt, delaved navments and interest ciaimR Adeniate.1~~ ~ -_~~ -_ --~-- -Jr----- - ------,--_ _r,____ _ ____ ____

Budget Provisions should be made for Donor funded projects.

The effects of (ii - iv) above was a loss of approximately Kshs. 20 million in delayed paymentsinterest Clains.

Financial and Management System

A Financial and Management System - "Powerworks" was imposed on the Government by theDonor. This was a direct import from a project in Gambia and which did not work because:

It was not locally develoned. had no local sunnort and could not e modified.

T.he source code ,vasc the proper4~, of the developer and ans change w xould requisre the developrs1n~

to fly from Gambia and back.

It should have been locally developed and this is recommended for future projects.

Lesson 8Borrower - Treasury

Contracts countersignature, which used to go well deteriorated far towards the closure of theCredit in addition other bureaucracies and nrocedures which hinder speedv nroiectimplementation involved. These need either attention if Credit Agreements are to be honored or

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be inbuilt in the Credit Agreements. On one occasion the PMU consultants stayed for six monthstWilffihouaut andi on annther the Prnoect Au,ditnrg cniilt not be napadh-th Aiip to nan..o,antprcidonpr

contracts.

Lesson 9Local Contractor Participation

Due to the low activity in the Construction industry in the previous years many local contractorscould not meet the required criteria for participation. Even those who made it to qualify had tostruggle to complete.

Lesson 10Small ContraoMnr Cra,dapaity lfiiilina

Tl a prOjUectof thi0 s u a--uMV, airU LulellellatlIUonI L1lU.LLIU5s, LL lb rLUL pjoubleUIv LU hlave CorL,Utual

capacity building since the requirements for qualification were beyond their reach. Afternegotiations with the Donor, quaiifcation criteria were iowered. Tnis enabled some smailcontractors to qualify. However not so good performances by the same small contractors waswitnessed even on very small health contracts.

Lesson 11Discipline in the Construction Industry

There is still a lot of discipline that needs to be injected in the Conntruction Tnductry. It mulst beeverybody's responsibility starting with the Employers/Donors applying strict procurement

proceulms andL promptljJ paymentsdil, OUIJ9V VIOLr 1 ,UL JLDIkaU1LWJL~lir..iz~ui , &V iO v ur,iLq-nJ piumi.00unai

ethics and Contractors/service providers not being rewarded for poor performance by beingawarded more Contracts.

Lesson 12Project Audit

Our experience is that the Proiect Auditors turned out to be an asset rather than an impediment asauditors would be treated in a project. We were able to resolve project issues and take correctiveaction through this live tvne of audit. It is our strong recmnnmendatinn that large projects needthis type of audit because the post project audits done are not useful in taking corrective action.d-oA i tn not nez i,r..A ob+ le e.z.ti-n of b -eAmistakes/information.

Lesson 13Claims

We have experienced claims which were either directly financial or time extension with andwithout costs. The majority of them had the following as their causes and future implementersand service providers should take remedial action.

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BLddUUUing on LreliLUiay LDeign1- L UUl, uuLtcLy.

Lack of Information on Existing Services - Service providers.Delayed information to Contractors - This has to do with Technicai 'unit Capacity.Delayed Payments - This has adequately been covered under lesson 7.

Lesson 14Sustainability

Our experience on recently completed projects is that Agencies responsible for infrastructure havenot fiullu ne-ppnt,-A 1nd nractiepd the mr..o- econnomir. 1 wav nf clich-nnne hv nr&VPnftivP/rnn1tinP

maintenance rather than repair. Some degree of negligence has been observed even with simpleop- eraioUnUs C Ud1iLLnaVg L,L,nV1IancLV diu lega' eI0ocerICIr,to vi 'ev ouading ZCgLuvab.Ls.

Lesson 15Institutional Development

The GoK needs to have contingency plans complete with institutional framework, specialimplementation procedures and financial guidelines to accommodate GoK and donor funding toundertake future ENEP type of proiects in the most efficient and effective manner.

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IBRD 29632

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Report No.: 24018Type: ICR