Rural Roads and Access Project (RRP MYA 50218)

Project Number: 50218-002 Loan and Grant Numbers: xxx yyy October 2019

Republic of the Union of Myanmar: Rural Roads and Access Project

Project Administration Manual

ABBREVIATIONS

ADB DDIS

– –

Asian Development Bank Detailed Design and Implementation Supervision

DRRD – Department of Rural Road Development MOC MOPF

– –

Ministry of Construction Ministry of Planning and Finance

PAM – project administration manual PMU – project management unit QCBS – quality- and cost-based selection SOE – statement of expenditure TOR – terms of reference

CONTENTS I. PROJECT DESCRIPTION 1

II. IMPLEMENTATION PLANS 2 A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3

III. PROJECT MANAGEMENT ARRANGEMENTS 4 A. Project Implementation Organizations: Roles and Responsibilities 4 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 6

IV. COSTS AND FINANCING 8 A. Cost Estimates Preparation and Revisions 9 B. Key Assumptions 9 C. Detailed Cost Estimates by Expenditure Category 10 D. Allocation and Withdrawal of Loan and Grant Proceeds 10 E. Detailed Cost Estimates by Financier 12 F. Detailed Cost Estimates by Outputs 13 G. Detailed Cost Estimates by Year 14 H. Contract and Disbursement S-Curve 15 I. Fund Flow Diagram 16 A. 17

V. FINANCIAL MANAGEMENT 18 A. Financial Management Assessment 18 B. Disbursement 24

VI. PROCUREMENT AND CONSULTING SERVICES 26 A. Advance Contracting and Retroactive Financing 27 B. Procurement of Goods, Works, and Consulting Services 27 C. Procurement Plan 27 D. Consultants Terms of Reference 27

VII. SAFEGUARDS 28 A. Environment 28 B. Social Safeguards (Involuntary Resettlement and Indigenous Peoples) 29

VIII. GENDER AND SOCIAL DIMENSIONS 31

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 34 A. Project Design and Monitoring Framework 34 C. Monitoring 36 D. Evaluation 36 E. Reporting 37 F. Stakeholder Communication Strategy 37

X. ANTICORRUPTION POLICY 38

XI. ACCOUNTABILITY MECHANISM 39

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 39

Project Administration Manual Purpose and Process

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

The Department of Rural Road Development of the Ministry of Construction (MOC) are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance the Department of Rural Road Development of MOC of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

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

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

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

I. PROJECT DESCRIPTION 1. The Government has requested the Asian Development Bank (ADB) to help finance Myanmar’s national rural road and access program, which aims to connect 80% of registered villages by all-weather roads by 2030. ADB plans to support the government’s program through a series of investment projects, and as the first proposed project, it will improve rural road access in two poor regions in Myanmar, Ayeyarwady and Magway by (i) improving about 152 kilometers (km) of rural roads to paved standard; (ii) improving the rural roads’ maintenance management regime and respond to disaster risk affecting the rural road network, and (iii) improving rural road safety. The project extends efforts of the ADB to systematically upgrade the much-needed country’s Core Rural Road Network (CRRN) to increase rural access and inclusive economic growth in Myanmar, by preparing the future project during its implementation. 2. The project is aligned with the following impact: all-weather and safe road infrastructure developed.1 The project will have the following outcome: disaster-resilient road access for rural people in Ayeyarwady and Magway Regions improved. 3. Output 1: Climate-resilient roads rehabilitated. The proposed project will upgrade about 152 km of 14 unpaved roads in Ayeyarwady and Magway Regions to paved standard, with road widths of about 2.6 meters (m) to 3.0 m. To increase disaster resilience, especially in the Ayeyarwady Region, the roads will be raised above frequently occurring flood levels, with consideration for future climate change impacts. Pavement surfacing will be cement concrete or bituminous (penetration-macadam or double bituminous surface treatment). The detailed design and implementation supervision (DDIS) consultants, whose activities will be implemented under this output, will also help the DRRD prepare rural road projects for future phases.

4. Under this output, the implementing agency Department of Rural Road Development (DRRD) will recruit a Detailed Design and Implementation Supervision (DDIS) Consultant. An international consulting firm will be recruited to assist DRRD to design all roads, procure and supervise all civil works, monitor safeguards implementation, and support project management. The DDIS consultant will also help DRRD implement the two other outputs of the project and preparation of National Core Rural Road Program and Phase 2 of this project by ADB, likely 2022 onwards. 5. Output 2: Rural road maintenance management strengthened. The project will develop simple inventories of the CRRN, starting with the project roads. It will cover data on geographical location, length, cross section, historical maintenance records, future maintenance plans, budgetary requirements, evaluations, with respect to routine and periodic maintenance.

6. Emergency maintenance. The project will help DRRD improve its delivery of emergency maintenance works. The DRRD carries out a significant amount of emergency maintenance each year. However, its contracting modalities are not suitable for this type of maintenance, resulting in delays in starting urgent works to restore access. The project will support DRRD in developing suitable contracting modalities (e.g., term-based contracts) that allow procurement to take place before the disaster occur, which allows works to be initiated through a simple work order. It will develop suitable bidding and contract documents based on common disaster-related damages.

1 Government of Myanmar, Ministry of Transport and Communications. 2015. National Transport Sector Development

Master Plan. Nay Pyi Taw.

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7. Emergency management for disaster resilience. The project will also help DRRD assess the disaster risk of the rural road network in the project regions, by generating or gathering historical disaster loss and damage data, flood hazard maps, and climate change impacts, and integrating them in the CRRN database to improve the disaster resilience of the roads. Building from this information, the project will develop a pilot emergency management plan for DRRD for the most disaster-vulnerable village in the project region. 8. Output 3: Rural road safety strengthened. Given the improved road conditions to paved standards at project completion, road users will be exposed to safety risks because of the increased speeds of motorized vehicles. Traffic is expected to increase, and current traffic may change behaviors drastically. To mitigate these risks, this output will introduce a community-based road safety program. Since most road crashes are attributable to road user behavior, the focus will be on road user education and community enforcement.2F

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

9. The effectiveness of the loan and grant agreements is expected in March 2020, after which the project implementation period is five years. The project is expected to be physically completed by June 2025. The loan and grant closing date will be 31 December 2025. The project’s milestones of readiness activities and overall project implementation are described in Tables 1 and 2.

Table 1: Project Readiness Activities 2019 2020 Responsible

Individual/Unit/Agency/ Government Q3 Q4 Q1 Q2

Advance contracting actions EA Retroactive financing actions - Establish project implementation arrangements

EA

ADB Board approval ADB Loan/grant signing Gov, ADB Government legal opinion provided Gov Government budget inclusion Gov Loan/grant effectiveness Gov, ADB

ADB = Asian Development Bank, EA = executing agency, Gov = government. Source: Asian Development Bank.

2 A road crash is an event occurring between a motorized vehicle and another motorized vehicle, a road user, or an

object, which is fully attributable to human error.

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B. Overall Project Implementation Plan

Table 2: Project Implementation Plan

DMF = design and monitoring framework, Q = quarter. Source: Asian Development Bank.

A. DMFConsultancy Services

1 Advertising of DDIS on CMS 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 Preparation and approval of Submission 1 (Shortlist and RFP) 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 03 Proposals preparation and submission by Consultants 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 04 Technical Evaluation and approval of submission 2 (TER) 0 0 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 05 Financial opening and approveal of submission 3 (CER) 0 0 0 0 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 06 Negotiations and contract signing 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 07 Mobilization 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 08 Implementation of DDIS services 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0

Output 1 - Rural Roads1 Detailed Engineering Design 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 Procurement 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 03 CW1&2: CW1(Ayeyarwady 1 (Pantanaw) )/CW2 (Magway (Natmauk/Myothit)) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0

CW3: Ayeyarwady 2 (Maubin) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0Output 1 - Preparation of other rural road subprojects

1 Planning 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 DED and safeguards preparation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 03 Procurement 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Output 2 - Road maintenance management1 Maintenance System Development and Capacity building activities 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0

Output 3 - Rural road safety1 Program design 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 Program implementation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0

B. Management Activities1 Procurement plan key activities to procure contract packages 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 02 Consultant selection procedures 0 0 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 03 Environment management plan key activities (supervision and monitoring) 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 04 Gender action plan key activities 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 05 Communication strategy key activities 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 06 Annual and/or midterm review 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 07 Project completion report 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 0

2022 2023 2024 2025MYA: Rural Roads and Access Ssector Project 2019 2020 2021

Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4Q2 Q3 Q4 Q1 Q2 Q3Q4 Q1 Q2 Q3 Q4

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 3: Role and Responsibility of Project Implementation Organizations Project Implementation Organizations Management Roles and Responsibilities Executing agency: Ministry of Construction (MOC)

· Responsible for overall project implementation; and · Complying with all covenants in the Loan/Grant Agreement.

Implementing agency:

Department of Rural Road Development

· Establishment of the PMU; · Timely provision of counterpart funds for project activities; · Recruiting and supervising consultants and contractors · Quality assurance of works and services of consultants, contractors and

counterpart staff; · Establishing Bid Evaluation Committee and Consultant Evaluation

Committee with qualified staff · Ensuring procurement review committee is established and timely

meetings are scheduled; · Recruitment/filling-up adequate qualified staff in PMU including

procurement, contract management, technical, social and environmental expertise and plan and organize capacity enhancement workshops/trainings for the staff;

· Establishing a strong financial management system and submitting timely withdrawal applications to ADB, ensuring financial audits are conducted as per agreed timeframe and taking recommended actions;

· Complying with all covenants in the Loan/Grant Agreement, under MOC’s oversight; and

· Collecting and retaining all support documents, reporting documents and annual audit reports and financial statements.

Project Management Unit (under DRRD)

· Procurement of works, goods, consulting and non-consulting services and contract awards;

· Preparing contract management plans and effective management of consultants and contractors;

· Monitoring and evaluation of project activities and outputs, including periodic review, preparation of review reports, identifying issues and action plans; and

· Preparing regular periodic progress reports, and the project completion report

Ministry of Planning and Finance

· Signing the Loan/Grant Agreement; · Providing documents and other requirements for loan/grant effectiveness; · Allocating and releasing counterpart funds; · Providing ADB with details of the authorized staff with specimen

signatures for withdrawal application processing · Requesting extensions of the loan/grant closing date; and · Processing and submitting to ADB any request, when required, for

reallocating the loan proceeds.

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Project Implementation Organizations Management Roles and Responsibilities Asian Development Bank

· Assist MOC, DRRD and the PMU with timely guidance at each stage of project implementation in accordance with the agreed implementation arrangements;

· Timely Review all the documents that require ADB approval; · Conduct an inception mission, periodic loan/grant review missions, a mid-

term review, a completion mission for the project, and an overall project completion mission;

· Monitor and ensure compliance with all loan covenants; · Process withdrawal applications and release payments to contractors,

consultants, and others as appropriate; · Monitor compliance with financial audit recommendations; · Regularly update ADB’s project performance review reports with

assistance from DRRD and progress reports; and · Regularly post on the ADB website updated project information

documents for public disclosure. ADB = Asian Development Bank, DRRD = Department of Rural Road Development. Source: Asian Development Bank. B. Key Persons Involved in Implementation

Ministry of Construction (Executing Agency)

Officer's Name U Kyaw Linn Position: Deputy Minister Telephone +95 67407073 Email address eekyawlinn@gmail.com

Department of Rural Road Development (Implementing Agency)

Officer's Name U Khin Thet Position: Director General Telephone +95 450990666 Email address khinthet817@gmail.com

Project Management Unit Additional Contact Person

Officer's Name U Win Thein Position: Director Telephone +95 450049540 Email address winthein.des@gmail.com Officer’s Name Daw Tin Moe Myint Position: Deputy Director General Telephone +95 9 5118240 and 9 785118240 Email address tinmoemyint85@gmail.com

Asian Development Bank

Southeast Asia Transport and Communications Division (SETC)

Staff Name: Hiroaki Yamaguchi Position: Director Telephone No. +63 26325413 Email address hyamaguchi@adb.org

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Mission Leaders Staff Name Shihiru Date Position: Senior Transport Specialist Telephone No. +95 067 8106280 Email address sdate@adb.org Staff Name Chaorin Shim Position: Transport Specialist Telephone No. +63 26324097 Email address cshim@adb.org

C. Project Organization Structure

10. The project’s executing agency will be the Ministry of Construction (MOC), and the implementing agency will be DRRD. The DRRD established a project management unit (PMU) that will be responsible for the day-to-day management of the project on 3 May 2019. It was approved by the MOC Executive Committee Meeting by EC-14/2009 on 22 April 2019. The PMU will be headed by a full-time project director of chief engineer level; one director and one deputy director as engineer level, and will be staffed with engineering, financial, administrative and safeguards specialists. The PMU will be based in Nay Pyi Taw. There will be two site offices of the PMU in Ayeyarwady and Magway, which will be supported by contractors. Below is an outline organization chart for the project and for the PMU.

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Figure 1: Project Organization Chart

Republic of the Union of Myanmar, Ministry of Public Finance

(Borrower)

Ministry of Construction (Executing Agency)

Department of Rural Roads Development

(Implementing Agency)

DDIS Consultant

Contractors

Project Management Unit

Asian Development Bank

Administrative

Contractual

Supervision

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Figure 2: Project Management Unit Organization Chart

IV. COSTS AND FINANCING

11. To help finance the project, the government has requested (i) a concessional loan of $45.4 million from ADB’s ordinary capital resources (including $11.6 million allocation from Disaster Risk Reduction funding set-aside of concessional ordinary capital resources), and (ii) a grant not exceeding $5.8 million from ADB’s Special Funds resources (Asian Development Fund).3 The government will finance equivalent of $1.21 million as interest during implementation and for resettlement.

Table 4: Summary Cost Estimates ($ million)

Item Amounta A. Base Costb 1. Output 1: Climate Resilient Roads Rehabilitated 44.06 2. Output 2: Rural Road Maintenance Management Improved 0.15 3. Output 3: Rural Road Safety Improved 0.09 Subtotal (A) 44.30 B. Contingenciesc 6.90 C. Financial Charges During Implementationd 1.21 Total (A+B+C) 52.41 a Includes taxes and duties of $4.06 million. Such amount does not represent an excessive share of the project cost. b In April 2019 prices. c Physical contingencies computed at 10.0% for civil works. Price contingencies computed at average of 4.5% on

foreign exchange costs and 7.9% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d Includes interest charges. Interest during construction for the ordinary capital resources concessional loan has been computed with a 1.0% interest rate per year during the 8 year grace period and 1.5% per year thereafter.

Source: Asian Development Bank. 3 To be financed under the disaster risk reduction funding allocation of the 12th replenishment of the Asian

Development Fund.

Project Management Office Naypyitaw

PMU Head – 1 Director – 1 Deputy Director – 1 Finance and administration – 3 Procurement and contracts – 2 Safeguards (environment) – 1 Safeguards (social) – 1

Site Office 1: Ayeyarwady Director – 1

Deputy Director – 1 Maubin staff – 2

Pantanaw staff - 2

Site Office 2: Magway Director – 1

Deputy Director – 1 Natmouk staff – 2 Myothit staff - 2

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12. ADB will finance the expenditures in relation to civil works, consultants, incremental administrative costs (for project administration), taxes and duties on ADB-financed expenditures. The government will finance the equivalent of $1.21 million for interest during implementation, and the resettlement cost. Climate adaptation is estimated to cost $18.53 million. ADB will finance 100% of such costs.

Table 5: Summary Financing Plan

Source Amount

($ million) Share of Total

(%) Asian Development Bank

Ordinary capital resources (concessional loan) 45.40 86.7 Special Funds resources (Asian Development Fund) a 5.80 11.0

Government 1.21 2.3 Total 52.41 100.0

a To be financed by the ADF 12 disaster risk reduction funding. Source: Asian Development Bank. A. Cost Estimates Preparation and Revisions

13. Cost estimates were prepared during an ADB Mission (24 April to 30 April 2019). Civil works unit costs were based on prevalent market rates in Myanmar as of April 2019. Consultant cost estimates are based on fees and rates observed for similar assignments in 2016 and prevalent market rates in Myanmar as of April 2019. prevalent market rates in Myanmar as of April 2019. 14. The project management and supervision consultant will periodically calculate cost estimates until project completion. Project cost estimates will be revised after detailed design, after procurement of the civil works, during the mid-term review mission, and at project completion.

B. Key Assumptions

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

(i) Exchange rate: MMK1,520 = $1.00 (as of 30 April 2019). Cost estimates were calculated under the assumption of a purchasing power parity exchange rate.

(ii) Price contingencies based on expected cumulative inflation over the implementation period are as follows:

Table 6: Escalation Rates for Price Contingency Calculation

Item 2020 2021 2022 2023 2024 2025 Average Foreign rate of price inflation 1.5% 1.6% 1.6% 1.6% 1.6% 1.6% 1.6% Domestic rate of price inflation 6.5% 7.0% 7.2% 7.2% 7.2% 7.2% 7.1%

Source: Asian Development Bank.

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C. Detailed Cost Estimates by Expenditure Category

Table 7: Detailed Cost Estimates by Expenditure Category

Item

($ million)

% of Total Base Cost

Foreign

Exchange Local

Currency Total Cost

A. Investment Costs 1. Civil works 17.60 21.10 38.70 87.4% 2. Consultants 5.10 0.00 5.10 11.5% 3. Environment and social mitigation a 0.00 0.00 0.00 0.0% 4. Incremental Administration Costs 0.50 0.00 0.50 1.1% Subtotal (A) 23.20 21.10 44.30 84.5% B. Contingencies 1. Physical 2.00 2.04 4.04 9.2% 2. Price 1.30 1.56 2.86 6.5% Subtotal (B) 3.30 3.60 6.90 13.2% C. Financial Charges During Implementation 1. Interest during construction 1.21 0.00 1.21 2.7% Subtotal (C) 1.21 0.00 1.21 2.7% Total Project Cost (A+B+C) 27.71 24.70 52.41 100.0%

Notes: Numbers may not sum precisely because of rounding. a Includes resettlement costs of $800. Source: Asian Development Bank. D. Allocation and Withdrawal of Loan and Grant Proceeds

16. Tables 8 and 9 sets forth the categories of works and other items to be financed out of the proceeds of the ADB loan and grant, and the allocation of amounts to each such category.

Table 8: Allocation and Withdrawal of ADB Loan Proceeds ADB Financing

Number Item

Total Amount Allocated for ADB

Financing ($) Percentage and Basis for

Withdrawal from the Loan Account 1 Civil Works a 38,000,000 100.00% of total expenditures claimed 2 Incremental Administration Costs 500,000 100.00% of total expenditures claimed 3 Unallocated 6,900,000

Total 45,400,000 ADB = Asian Development Bank. a Before commencing any withdrawal from this Works category, the amount under the corresponding category under the

Grant Agreement shall be fully utilized. Source: Asian Development Bank.

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Table 9: Allocation and Withdrawal of ADB Grant Proceeds

ADB Financing

Number Item

Total Amount Allocated for ADB

Financing ($)

Percentage and Basis for Withdrawal from the Grant

Account 1 Civil Works* 700,000 100.00% of total expenditures

claimed 2 Consulting Services 5,100,000 100.00% of total expenditures

claimed Total 5,800,000

ADB = Asian Development Bank. * Withdrawal from this Works category shall be fully utilized, before any amount is withdrawn from the corresponding

category under the Loan Agreement. Source: Asian Development Bank.

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E. Detailed Cost Estimates by Financier

Table 10: Detailed Cost Estimates by Financier ADB Loan ADB Grant Government Total Cost

Item Amount % of Cost

Category Amount % of Cost

Category Amount % of Cost Category Amount

Taxes and

Duties

A. Investment Costs

1. Civil Works 38.00 98.20% 0.70 1.80% 0.00 0.00% 38.70 (3.50) 2. Consultants 0.00 0.00% 5.10 100.00% 0.00 0.00% 5.10 (0.51)

3. Environment and social mitigation* 0.00 0.00% 0.00 0.00% 0.00 100.00% 0.00 (0.00) 4. Incremental Administration Costs 0.50 100.00% 0.00 0.00% 0.00 0.00% 0.50 (0.05) Subtotal (A) 38.50 86.90% 5.80 13.10% 0.00 0.00% 44.30 (4.06)

B. Contingencies 6.90 100.00% 0.00 0.00% 0.00 0.00% 6.90 (0.00)

C. Financial Charges During Implementation 0.00 0.00% 0.00 0.00% 1.21 100.00% 1.21 (0.00)

Total Project Cost (A+B+C) 45.40 86.60% 5.80 11.10% 1.21 2.30% 52.41 (4.06) % Total Project Cost

86.60%

11.10%

2.30% 100%

Note: Numbers may not sum precisely because of rounding. * Includes resettlement costs of $800. Source: Asian Development Bank.

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F. Detailed Cost Estimates by Outputs

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

Item Total Cost

Output 1 Output 2 Output 3

Amount % of Cost Category Amount

% of Cost Category Amount

% of Cost Category

A. Investment Costs 1. Civil Works 38.70 38.70 100.0% 0.00 0.0% 0.00 0.0% 2. Consultants 5.10 4.86 95.2% 0.16 3.1% 0.09 1.7% 3. Environment and social mitigation* 0.00 0.00 100.0% 0.00 0.0% 0.00 0.0% 4. Incremental Administration Costs 0.50 0.50 99.5% 0.00 0.4% 0.00 0.2% Subtotal (A) 44.30 44.06 99.5% 0.16 0.4% 0.09 0.2% B. Contingencies 6.90 6.86 99.5% 0.02 0.4% 0.01 0.2% C. Financial Charges During Implementation 1.21 1.20 99.5% 0.00 0.4% 0.00 0.2% Total Project Cost (A+B+C) 52.41 52.12 99.5% 0.18 0.4% 0.10 0.2% Note: Numbers may not sum precisely because of rounding. * Includes resettlement costs of $800. Source: Asian Development Bank.

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G. Detailed Cost Estimates by Year

Table 12: Detailed Cost Estimates by Year ($ million)

Item Total Cost 2020 2021 2022 2023 2024 2025

A. Investment Costs 1. Civil Works 38.70 0.00 3.30 11.13 15.89 7.48 0.90 2. Consultants 5.10 0.77 0.58 1.30 1.30 0.90 0.26 3. Environment and social mitigation* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4. Incremental Administration Costs 0.50 0.00 0.11 0.11 0.11 0.11 0.06 Subtotal (A) 44.30 0.77 3.99 12.54 17.30 8.49 1.21 B. Contingencies 6.90 0.02 0.12 0.46 3.49 2.69 0.12 C. Financial Charges During Implementation 1.21 0.00 0.00 0.07 0.26 0.42 0.45 Total Project Cost (A+B+C) 52.41 0.79 4.11 13.07 21.05 11.60 1.79

% Total Project Cost 100% 2% 8% 25% 40% 22% 3%

* Includes resettlement costs of $800 to be disbursed in 2021. Source: Asian Development Bank.

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H. Contract and Disbursement S-Curve

17. Tables 13, 14 and Figures 3, 4 below shows the contract awards and disbursement projections for the ADB loan/grant over the implementation period for the project.

Table 13: Contract Award and Disbursement Projections (ADB Loan) ($ million)

Contract Awards Disbursements Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total 2020 0.0 0.0 0.0 0.0 0.0 2020 0.0 0.0 0.0 0.0 0.0 2021 0.0 0.0 0.0 19.9 19.9 2021 0.1 0.1 0.1 2.2 2.4 2022 0.0 0.0 0.0 18.1 18.1 2022 1.5 1.5 3.5 5.5 12.0 2023 0.0 0.0 0.0 0.0 0.0 2023 5.0 2.8 7.0 4.9 19.6 2024 6.9 0.0 0.0 0.0 6.9 2024 4.6 2.3 3.2 0.2 10.3 2025 0.0 0.0 0.0 0.0 0.0 2025 0.1 1.0 0.0 0.0 1.1

Total 44.9 Total 45.4 Source: Asian Development Bank

Figure 3: Contract and Disbursement S-Curves (ADB Loan) ($ million)

Source: Asian Development Bank

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Table 14: Contract Award and Disbursement Projections (ADB Grant) ($ million)

Contract Awards Disbursements Year Q1 Q2 Q3 Q4 Total Year Q1 Q2 Q3 Q4 Total 2020 0.0 0.0 5.1 0.0 5.1 2020 0.0 0.0 0.4 0.4 0.8

2021 0.0 0.0 0.0 0.7 0.7 2021 0.1 0.8 0.1 0.3 1.3 2022 0.0 0.0 0.0 0.0 0.0 2022 0.3 0.3 0.3 0.3 1.3 2023 0.0 0.0 0.0 0.0 0.0 2023 0.3 0.3 0.3 0.3 1.3 2024 0.0 0.0 0.0 0.0 0.0 2024 0.3 0.3 0.1 0.1 0.9 2025 0.0 0.0 0.0 0.0 0.0 2025 0.1 0.1 0.0 0.0 0.3

Total 5.8 Total 5.8 Source: Asian Development Bank

Figure 4: Contract and Disbursement S-Curves (ADB Grant) ($ million)

Source: Asian Development Bank.

I. Fund Flow Diagram

18. The fund flow diagram below shows how the funds will flow from ADB and the Borrower to implement project activities.

17

Figure 5: Funds Flow Diagram A.

Department of Rural Roads Development (implementing

agency)

Ministry of Planning and Finance

Ministry of Construction

(executing agency)

Project consultants

Civil works contractors

Withdrawal applications and endorsed claims for

payment

Claims for payment

Counterpart Funds1

Direct payment of loan funds

Budget Approval

1 Counterpart Funds include resettlement costs of $800 and interest during implementation. Supporting Agreements: ü Loan/Grant Agreements between ADB and the

Government Republic of the Union of Myanmar ü Management Agreement between Ministry of

Construction and Department of Rural Roads Development

Budget approval

Legend:

Fund flow Requests and approvals

Loan repayments

Asian Development

Bank

Counterpart Funds

Advance account under ADB loan

(incremental administration

)

replenishment

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

19. DRRD will be the implementing agency (IA) for the Project and thus responsible for the financial management (FM) arrangements. DRRD established a project management unit (PMU) to manage day-to-day activities, including disbursements, procurement, contract administration, monitoring and reporting. MOC, in its role as the executing agency (EA), will be responsible for overall project implementation and for complying with the covenants in the Loan/Grant Agreement. 20. The Financial Management Assessment (FMA) of the Department of Rural Road Development (DRRD) was undertaken through interviews with DRRD officials on 29 January 2018 and 11 April 2019. The interviews with the officials of the Ministry of Construction were conducted on 2 February 2018. The Financial Management Assessment Questionnaire (FMAQ) for the DRRD is shown in Annex 2.

21. The FMA considered the capacity of the MOC and DRRD, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. Based on the assessment, the key financial management risks identified are shown below.

Table 15: Financial Management Risks Particulars Conclusions

Organization and Personnel

The planned organizational set-up and the related governance arrangements are considered appropriate for the needs of the project. DRRD’s finance/accounting staff are sufficiently qualified and experienced to implement FM as per GOM requirements, even though DRRD has only recently become an MOC agency, and turnover among key staff is low. However, the staff lack knowledge of and experience with the FM requirements and procedures with externally-funded projects, including for ADB projects. It is expected that existing staff from DRRD’s Finance & Accounts Division will be assigned to the PMU. No new staff will be recruited. The DRRD is currently undermanned with many positions currently vacant. This might cause delays in the preparation of the project financial statements since the existing staff will be handling project tasks aside from the regular tasks.

Information Systems

DRRD has no computerized FM information system in place, and spreadsheets are used only sporadically, which increases the risk of errors and results in longer processing time. This delays the preparation of financial reports. PMUs established to manage ADB-funded projects in Myanmar apply spreadsheets for accounting and financial reporting purposes (rather than dedicated accounting software). However, using spreadsheets may involve risks regarding information security and back-up, which potentially could compromise the integrity of project accounting records.

Accounting Policies and Procedures and Financial Reporting System

Accounting and internal control procedures are based on national requirements, but DRRD does not have an entity-specific manual or other guidance/documentation. DRRD’s Accounting and Finance Section takes up to three months to prepare financial reports, which limits the value of reporting to monitor budget performance.

Internal Controls

DRRD aims to divide the functional responsibilities between different staff in DRRD’s Finance & Accounts Division in order to ensure proper segregation of incompatible

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Particulars Conclusions duties. However, due to the current shortage of staff, there are occasional functional overlaps between staff. This increases the risk of error and fraud.

Internal Audit There is no internal audit function in DRRD which means a lack of assurance to DRRD management that the FM system and processes are effective and adequate.

External Audit The OAG will audit the project financial statements. Entity-level financial statements are audited annually by the OAG, which also undertakes some performance audits and other types of external audits. There are examples of deficiencies in the coverage and timeliness in the external audit undertaken by the Office of the Auditor General (OAG) for on-going ADB-financed projects. This undermines the purpose of external audit in terms of the credibility of the financial statements and the accountability of DDRD in its role as implementing agency.

Budgeting While the framework for annual and medium-term budgeting as implemented by the Government of Myanmar (GOM) is rudimentary, DRRD’s budget process is relatively well-functioning and enables monthly monitoring. The low level of computerization makes it difficult to produce meaningful and timely financial reports, which in turn limits periodic monitoring of budgets. Variance analyses are done on a monthly basis, but those are done in a simplistic manner. There are no budgetary ceilings.

Fund Flow Arrangements

The funds flow arrangements for ADB’s loan are clear and the government counterpart funding covers limited and clearly identified activities.

Safeguard over Assets

DRRD maintains a Fixed Assets Register which is updated annually. Changes in fixed assets and stock are recorded as they occur. The DRRD conducts physical inventories annually. Any discrepancy identified between the physical inventory count and the records are brought to the attention of the proper personnel who takes appropriate action in accordance with government regulation.

ADB = Asian Development Bank, DRRD = Department of Rural Road Development, FM = Financial Management, FMIS = financial management information system, GOM = Government of Myanmar, OAG = Office of the Auditor General. Source: Asian Development Bank. 22. The overall project FM risk is, pre-mitigation, assessed to be Substantial. The proposed risk management measures to address the identified FM risks are presented in the table below.

Table 16: Financial Management, Internal Control and Risk Assessment and Risk Management Plan Working Table

Risk Type Risk Description Risk Assessment (without mitigation)a

Mitigation Measures / Risk Management Plan

Inherent Risk b Country-level risks The GOM’s PFM system has

a number of significant shortcomings, including limited fiscal transparency, low budget credibility, the classification system not yet fully developed, manual and time-consuming financial reporting, as well as a weak control environment which expose the PFM system to fiduciary risk.

High ADB will continue, as and where possible, to provide technical support and undertake policy-level initiatives to address systemic PFM issues so as to strengthen the GOM’s PFM system and actual procedures applied.

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Risk Type Risk Description Risk Assessment (without mitigation)a

Mitigation Measures / Risk Management Plan

Entity-specific risks DRRD, in its role as IA, has limited practical and operational experience with the FM procedures and requirements of ADB-financed projects. However, the FM responsibilities of the PMU will be clearly outlined.

Substantial The PMU will undertake the day-to-day FM tasks of the project.

Overall Inherent Risk Substantial - Project Risk c Organization and Personnel

The finance/accounting staff are adequately qualified and experienced to implement FM as per GOM requirements, but the staff are not familiar with ADB procedures and requirements. The DRRD is undermanned with many positions currently vacant. It is expected that existing staff from DRRD’s Finance & Accounts Division will be assigned to the PMU. No new staff will be recruited. This might cause delays in the preparation of the project financial statements since the existing staff will be handling project tasks aside from the regular tasks.

Substantial The PMU will for the duration of the project engage two full-time staff to manage the finance/accounting functions. Training on ADB procedures and requirements will be provided at project start. DRRD is in the process of filling a number of the currently vacant FM positions, including at the sub-national levels.

Information Systems FM is almost exclusively done manually, DRRD has no computerized financial management information system (FMIS) and spreadsheets are only used sporadically, which increases the risk of errors and processing time. This delays the preparation of financial reports.

Substantial DRRD will prepare and implement an IT enhancement strategy for the Finance & Accounts Division that also covers the PMU. Ensure that the PMU undertakes regular financial reporting on a timely basis.

Accounting Policies and Procedures and Financial Reporting System

Accounting policies and procedures are based on national requirements, including MOPF’s new financial rules and regulations, but staff are not familiar with the procedures and requirements for ADB-financed projects.

Substantial A project-specific FM Manual for the PMU will be developed by DRRD in support of DDIS consultant and ADB then approved by ADB.

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Risk Type Risk Description Risk Assessment (without mitigation)a

Mitigation Measures / Risk Management Plan

Internal Control Due to the current shortage of staff, there are occasional functional overlaps between staff and incompatible duties are not segregated. This increases the risk of error and fraud.

Substantial The PMU will for the duration of the project dedicate two staff to manage the finance/accounting functions. Training on ADB procedures and requirements will be provided at project start. DRRD is in the process of filling a number of the currently vacant FM positions, including at the sub-national levels.

Internal Audit While MOC’s internal audit function covers the GOM-funded activities of DRRD, it is not based on specific internal audit standards and it does not cover externally-financed projects.

High MOC, DRRD and ADB will discuss the possibility of MOC’s internal audit unit covering the ADB-financed project of DRRD.

External Audit There are examples of deficiencies in the coverage and timeliness in the external audit undertaken by the Office of the Auditor General (OAG) for on-going ADB-financed projects. This undermines the purpose of external audit in terms of the credibility of the financial statements and the accountability of DDRD in its role as implementing agency

Substantial The PMU will develop a ToR for the external audit that will be reviewed and formally approved by ADB. This will include an approach for monitoring implementation of audit recommendations.

Budgeting The low level of computerization makes it difficult to produce meaningful and timely financial reports, which in turn limits periodic monitoring of budget performance. There are no budgetary ceilings.

Substantial DRRD and MOC will consider the application of budgetary ceilings. The PMU will, based on the project-specific FM Manual, ensure to undertake regular financial reporting on a timely basis.

Funds Flow Arrangements

The funds flow arrangements for ADB’s loan are clear and the government counterpart funding covers limited and clearly identified activities.

Low None

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Risk Type Risk Description Risk Assessment (without mitigation)a

Mitigation Measures / Risk Management Plan

Safeguard over Assets

DRRD maintains a Fixed Assets Register. Changes in fixed assets and stock are recorded as they occur. The DRRD conducts physical inventories annually. Any discrepancy identified between the physical inventory count and the records are brought to the attention of the proper personnel who take appropriate action in accordance with government regulation.

Low None

Overall Project Risk Substantial - Overall Risk Substantial -

ADB = Asian Development Bank, DRRD = Department of Rural Road Development, FM = financial management, FMIS = financial management information system, GOM = Government of Myanmar, IA = Implementing Agency, IT = information technology, MOC = Ministry of Construction, MOPF = Ministry of Planning and Finance, OAG = Office of the Auditor General, PFM = public financial management, PMU = Project Management Unit, TOR = Terms of Reference. a Low, moderate, substantial, high. The assessment is based on the likelihood of occurrence and degree of impact. b Inherent Risk is the susceptibility of the project FM system to factors arising from the environment in which it operates,

such as country or sector-level rules and regulations as well as the agency’s working environment (assuming absence of any counter-checks or internal controls).

c Project Risk is the risk that the project accounting and internal control framework are inadequate to ensure project funds are used economically and efficiently and for the purpose intended, and that the use of funds is properly reported.

Source: Asian Development Bank. 23. The table shows that the overall fiduciary risk for the project without mitigation is considered to be substantial. This is a result of a substantial risk rating for the country system, substantial rating for the agency-specific risks, and combined substantial control risk rating for the project FM elements. When proposed mitigation measures are taken into account, the overall fiduciary risk will be considered as moderate.

24. The MOC and DRRD have agreed to implement an action plan as key measures to address the deficiencies. The financial management action plan is provided in Table 2.

Table 17: Time-Bound Financial Management Action Plan Weakness Mitigation Actions Timeframe Responsibility Inherent Risks Country-level risks - The GOM’s PFM system has a number of significant shortcomings, including limited fiscal transparency, low budget credibility, the classification system not yet fully developed, manual and time-consuming

ADB will continue, as and where possible, to provide technical support and undertake policy-level initiatives to address systemic PFM issues so as to strengthen the GOM’s PFM system and actual procedures applied.

2019-2025 ADB and GOM

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Weakness Mitigation Actions Timeframe Responsibility financial reporting, as well as a weak control environment which expose the PFM system to fiduciary risk.

Entity-specific risks -DRRD, in its role as IA, has limited practical and operational experience with the FM procedures and requirements of ADB-financed projects. However, the FM responsibilities of the PMU will be clearly outlined.

The PMU will undertake the day-to-day FM tasks of the project.

2019-2025 PMU

Project-Specific Risks Organization and Personnel - The finance/accounting staff are adequately qualified and experienced to implement FM as per GOM requirements, but the staff are not familiar with ADB procedures and requirements. The DRRD is undermanned with many positions currently vacant. It is expected that existing staff from DRRD’s Finance & Accounts Division will be assigned to the PMU. No new staff will be recruited.

Provide two full-time staff to manage the finance/accounting functions.

2019 DRRD

Carry out training on ADB procedures and requirements.

2019–2020 DRRD and ADB

Fill currently vacant FM positions, including at the sub-national levels.

2019–2020 DRRD and MOC

Information Systems-FM is almost exclusively done manually, DRRD has no computerized financial management information system (FMIS) and spreadsheets are only used sporadically, which increases the risk of errors and processing time. This delays the preparation of financial reports.

Prepare and implement an IT enhancement strategy for the Finance & Accounts Division that also covers the PMU. Ensure that the PMU undertakes regular financial reporting on a timely basis.

2019–2025 PMU and DRRD

Accounting Policies and Procedures and Financial Reporting System - Accounting policies and procedures are based on national requirements, including MOPF’s new financial rules and regulations, but staff are not familiar with the procedures and requirements for ADB-financed projects.

Develop a project-specific FM Manual for the PMU to be approved by ADB.

2020 DRRD and ADB

Internal Control - Due to the current shortage of staff, there are occasional functional overlaps between staff and incompatible duties are not

Provide two full-time staff to manage the finance/accounting functions.

2019 DRRD

Carry out training on ADB procedures and requirements.

2019-2020 DRRD and ADB

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Weakness Mitigation Actions Timeframe Responsibility segregated. This increases the risk of error and fraud.

Internal Audit - While MOC’s internal audit function covers the GOM-funded activities of DRRD, it is not based on specific internal audit standards and it does not cover externally-financed projects.

Discuss the possibility of MOC’s Internal Audit Unit covering the ADB-financed project of DRRD.

2019-2020 MOC, DRRD and ADB

External Audit - There are examples of deficiencies in the coverage and timeliness in the external audit undertaken by the Office of the Auditor General (OAG) for on-going ADB-financed projects. This undermines the purpose of external audit in terms of the credibility of the financial statements and the accountability of DDRD in its role as implementing agency.

The PMU will develop a ToR for the external audit that will be reviewed and formally approved by ADB. This will include an approach for monitoring implementation of audit recommendations.

2020 DRRD and ADB

Budgeting -The low level of computerization makes it difficult to produce meaningful and timely financial reports, which in turn limits periodic monitoring of budget performance. There are no budgetary ceilings.

DRRD and MOC will consider the application of budgetary ceilings. The PMU will, based on the project-specific FM Manual, ensure to undertake regular financial reporting on a timely basis.

2019 DRRD and MOC and PMU

ADB = Asian Development Bank, DRRD = Department of Rural Road Development, FM = financial management, FMIS = financial management information system, GOM = Government of Myanmar, IA = Implementing Agency, IT = information technology, MOC = Ministry of Construction, MOPF = Ministry of Planning and Finance, OAG = Office of the Auditor General, PFM = public financial management, PMU = Project Management Unit, TOR = Terms of Reference. Source: Asian Development Bank.

B. Disbursement

1. Disbursement Arrangements for ADB

25. The loan and grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements between the government and ADB. Online training for project staff on disbursement policies and procedures is available. Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control.4 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 26. Payments for works and consulting services should be certified by the PMU Project Director based on the payment terms in the contracts. The PMU, through the DRRD, will be

4 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning

25

responsible for: (i) preparing disbursement projections; (ii) requesting budgetary allocations for counterpart funds; (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications (WAs) to ADB with a copy to be sent to Ministry of Planning and Finance (MOPF). 27. The minimum value per WA is $90,000 of the contract amount for each lot, given the size of the contracts of the projects. 28. Advance fund procedure. For the incremental administration costs part of the ADB loan DRRD will, through the PMU, establish an advance account promptly after loan effectiveness at a commercial bank to be proposed by the MOPF. The ceiling of the advance will be $100,000. The currency of the advance account will be in US dollars. The advance account is to be used exclusively for ADB’s share of eligible expenditures. DRRD will be accountable and responsible for proper use of advances to the advance account. 29. DRRD (through the PMU) administering the advance account may request for initial and additional advances to the advance account based on an Estimate of Expenditure Sheet setting out the estimated expenditures to be financed through the account for the forthcoming 6 months.5 Supporting documents should be submitted to ADB or retained by DRRD in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time) when liquidating or replenishing the advance account. 30. The SOE procedure defined in the ADB’s Loan Disbursement Handbook will not be used for reimbursement of eligible expenditures or liquidation of advances to the advance account until the PMU staff have received disbursement training and regarded as adequate to use the SOE procedure, which will be revisited during implementation. Currently, the capacity of DRRD is not high to immediately use the SOE procedure.6 31. Before the submission of the first withdrawal application (WA), the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per WA is stipulated in the Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid (i) by the DRRD and subsequently claimed to ADB through reimbursement, or (ii) through the advance fund procedure, unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements.

2. Disbursement Arrangements for Counterpart Funds 32. The PMU will be responsible for preparing disbursement projections, and requesting, through DRRD and MOC, normal and supplementary budgetary allocations for counterpart funds. 33. Accounting. The PMU will maintain separate books and records by funding source for all expenditures incurred by the project. The basis of accounting will be cash. The PMU will prepare consolidated project financial statements in accordance with the International Public Sector Accounting Standards (IPSAS).

5 Estimate of Expenditure sheet is available in Appendix 8A of ADB’s Loan Disbursement Handbook (2017, as

amended from time to time), 6 SOE forms are available in Appendix 7B of ADB’s Loan Disbursement Handbook (2017, as amended from time to

time).

26

34. Auditing and Public Disclosure. MOC will cause the detailed project financial statements to be audited in accordance with International Standards on Auditing (ISA) [International Standards of Supreme Audit Institutions (ISSAI)] by an independent auditor acceptable to ADB based on a terms of reference (ToR) acceptable to ADB. The audit, which will be undertaken by the Office of the Auditor General (OAG), will include a separate audit opinion on the use of the advance fund and on the use of SOE procedures, if applicable. The audited project financial statements (APFS) together with the auditor’s opinion will be presented in the English language by MOC to ADB within six months from the end of the fiscal year. 35. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the loan proceeds were used only for the purpose of the project; and (iii) whether the GOM was in compliance with the financial covenants contained in the legal agreements (where applicable). 36. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the OAG in its role as external auditor. 37. ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.7 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 38. After the review, ADB will disclose the APFS and the opinion of the auditors on the project financial statements no later than 14 calendar days of ADB’s confirmation of their acceptability by posting them on ADB’s website.8 The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.9

VI. PROCUREMENT AND CONSULTING SERVICES

39. All procurement of works and services financed by ADB will be undertaken in accordance

7 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

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

(ii) When APFS are not received within six months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a) inform the EA of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next six months.

(iii) When APFS are not received within 12 months after the due date, ADB may suspend the loan. 8 Public Communications Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications. 9 This type of information would generally fall under public communications policy exceptions to disclosure [ADB. 2011.

Public Communications Policy. Manila. Paragraph 97(iv) and/or 97(v)].

27

with ADB’s Procurement policy and Procurement Regulations for ADB Borrowers. A. Advance Contracting and Retroactive Financing

40. Advance contracting. All advance contracting will be undertaken in conformity with Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The issuance of invitations to bid and invitation for expression of interests under advance contracting will be subject to ADB approval. While the procurement actions are in advance, the contract signing shall take place after the loan/grant becomes effective. The borrower, MOC and DRRD have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 41. Retroactive financing. Retroactive financing is not envisaged and hence not in the scope of this project.

B. Procurement of Goods, Works, and Consulting Services

42. All procurement of goods, works and consulting services will be undertaken in accordance with ADB’s Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The Guidance Notes published by ADB in June 2018 will be referred for guidance in carrying out the procurement. 43. Open competitive bidding procedures with international advertisement will be used for civil works contracts estimated to cost $38.7 million or more. ADB’s standard bidding documents shall be used for this purpose. 44. An estimated 451 person-months (179 international, 272 national) of consulting services are required to (i) prepare detailed engineering designs, bills of quantities, technical specifications, detailed construction drawings, bidding documents, contract documents and contract management plans; (ii) assist PMU in procurement and contracts awards; (iii) Be employer’s representative in the role of ‘Engineer’ (for FIDIC contracts) or ‘Project Manager’ (for small works contracts) for all contracts and provide good contract management and administration; (iv) facilitate project management and implementation including environmental and social safeguards measures; and, (iv) strengthen the institutional and operational capacity of the executing agency. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality–cost ratio of 90:10. 45. An 18-month procurement plan indicating procurement methods, review procedures and estimated schedule is in Section C of procurement plan in Annex 3.

C. Procurement Plan

46. The procurement plan is prepared in accordance with the template provided in Guidance Notes for Strategic Procurement Plan published by ADB in June 2018. The packaging, procurement methodology, bidding process, review requirements are based on the “strategic procurement planning process” (Annex 4) considering the operating environment, risks and market analysis. D. Consultants Terms of Reference

47. DDIS Consultant are given in Annex 5 of this PAM.

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VII. SAFEGUARDS

48. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009) (SPS), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the ADB SPS. A. Environment

49. Initial environmental examination. The project has been classified as environment category B in accordance with the ADB SPS, and as “IEE Type Project” in accordance with Myanmar’s Environmental Impact Assessment Procedure (EIA Procedure 2015). Initial environmental examination (IEE) reports have been prepared for the two regions (Ayeyarwady and Magway) to meet the requirements of the ADB SPS and the EIA Procedure 2015. The IEE reports confirm that the proposed upgrading of about 150 kilometer (km) of existing unsealed roads or tracks in Ayeyarwady and Magway Regions to paved standard is not anticipated to cause significant adverse environmental impacts. With exception of villages adjacent to the roads, there are no environmentally sensitive receptors along the project roads. Roads located in or near legally protected areas were explicitly excluded from the project scope. 50. The construction activities that will be carried out are typical of small road projects that will entail some clearing along the road alignment, removal of unsuitable substrate, building of the embankment and paving. The impacts that these activities will generate include the generation of dust, noise, exhausts from haul trucks and hot mix plants; waste from construction and worker camps; water contamination; and occupational health and safety hazards. Each IEE includes an environmental management plan (EMP). Mitigation measures for all anticipated impacts have been developed and integrated into the EMP. These cover the pre-construction, construction, and operation stages of the project. No significant residual impact is anticipated. 51. Implementation Arrangements for Environment Safeguards. The responsibilities of various agencies and parties for implementing environment safeguards are provided below. 52. The DRRD as the implementing agency shall have the overall responsibility for overseeing the implementation of the IEEs and EMPs. DDRD will assign a qualified environment specialist as member of the PMU to oversee the implementation and monitoring of the project's environmental safeguards requirements. The PMU will have overall responsibility for: (i) ensuring that EMP requirements are reflected in bidding documents for works contracts; (ii) reviewing and clearing contractors’ EMP (CEMP); (iii) supervision and monitoring of the implementation of the EMP by works contractors; (iv) establishment and operation of the Grievance Redress Mechanism; (v) meeting all the conditions of the Environmental Compliance Certificate (ECC), as issued by the Ministry of Natural Resources and Environmental Conservation (MONREC); (vi) submitting semi-annual environmental monitoring reports to the MONREC and to ADB; (vii) identifying and implementing, as needed, corrective actions to address observed non-compliances. Some of the daily EMP supervision responsibilities may be delegated from the PMU site offices in Ayeyarwady and Magway provided that PMU site office staff are given the adequate training and support by the DDIS consultant. 53. DDIS consultant, selected by MOC. The DDIS consultant will be responsible for the following activities related to environmental safeguards: (i) supervision, monitoring and reporting on the contractors’ implementation of the EMP on behalf of PMU; (ii) recruiting and supervision of third party environmental monitoring contractor; (iii) preparation of the environmental safeguard monitoring reports on behalf of PMU; and (iv) assist PMU in organization of training, capacity

29

development, and setting up the grievance redress mechanism (GRM). The DDIS contractor will also recruit and supervise an environmental monitoring contractor (third party) to conduct air quality, water quality, noise monitoring during pre-construction and construction of the project, in accordance with the monitoring plan defined in the EMP. 54. Before the construction starts each work contractor (CW1, CW2 and CW3) will assign qualified environment, health and safety specialist, and prepare a Contractor Environmental Management Plan (CEMP) consistent with the EMP. The CEMP is to include all mitigation measures and monitoring requirements to be carried by the Contractor. The CEMP shall include/define: (i) Contractor’s institutional arrangements for EMP implementation, supervision, reporting; (ii) Camp Establishment & Management; (iii) Spill Prevention and Contingency Plan; (iv) Soil Erosion Prevention and Control Management Plan; (iv) Occupational Health and Safety Plan; (v) Waste Management Plan; (vi) Borrow Pits and Spoils Management Plan (including permits and licenses); (vii) Noise and Dust Control Plan; (viii) Tree Retention, Removal and Replanting Plan; (viii) Public Communication Plan. The CEMP will be submitted to the DDIS for review and approval prior commencement of work. 55. DRRD will establish a Grievance Redress Mechanism (GRM), with necessary assistance from the DDIS consultant, as required in the IEE reports, to prevent and address community concerns, reduce risks, and assist the project to maximize environmental and social benefits. The environment specialist of the PMU will act as Public Complaints Officer (PCO) to deal with complaints from affected people throughout implementation of the Project. Prior to construction, the PCO will finalize the GRM in collaboration with local governments and with support of the DDIS. The PCO should have experience and/or training in dealing with complaints and mediation of disputes. The PCO is to maintain a complaints database and communicate with Contractors, the DDIS, and village and township representatives and with complainants. B. Social Safeguards (Involuntary Resettlement and Indigenous Peoples)

56. Land losses will be experienced in Maubin Township area (Ayeyarwady Region) for road MBK005 and Natmauk Township are (Magway Region) for road NMK088. Three households will lose marginal strips of agricultural land along the road edge total 158 m2. Each of these losses represent less than 1% of total productive land used by the households. Four households will lose trees and crops. These include three households losing paddy crops associated with the loss of cropping land and another household losing three productive trees. There will be no loss of structures nor physical displacement. There will be marginal impacts on livelihoods for three households losing some productive land which are not severe in nature. No shops or other livelihood sources are affected. These include three households losing paddy crops associated with the loss of cropping land and another household losing three productive trees. There will be no loss of structures nor physical displacement. There will be marginal impacts on livelihoods for three households losing some productive land which are not severe in nature. No shops or other livelihood sources are affected. 57. Ethnic group such as Karen population are found in the project area of Pantanaw and Maubin where they comprise 51% and 21% of the respective populations. However, the project will not negatively affect then Karen ethnic group. The project will benefit the people in general who are living in the project area without any specific target or special benefit to the ethnic group in particular, therefore, a separate indigenous people plan (IPP) is not required. Consultations and other socio-economic details of the Karen people have been integrated in to the REGP. Consultations with a Karen Ethnic Group Association in Pantanaw reveal that they are well integrated with local Bamar communities. While maintaining their own distinct language, they are

30

fluent in Myanmar language. They expressed a desire for their community members to participate in project-related employment opportunities. Ethnic group will be considered as vulnerable for which provision for special assistance would be made in the entitlement matrix of the REGP. Consultation and participation plan has been prepared for the project which will ensure future consultations process throughout the project period. 58. DDIS consultants which will have safeguards experts responsible for updating, implementing and monitoring the REGP. DRRD has overall responsibility for REGP updating (including participating in DMS and engaging qualified appraiser), finalizing and approving updated REGP, securing resources (including financial), overseeing REGP implementation, monitoring, and liaison with relevant Regional and District government offices. DRRD will ensure that no physical or economic displacement will occur until 1) compensation at full replacement cost has been paid to the displaced persons: 2) other entitlements listed in the RP have been paid to the DP’s and 3) a comprehensive income and livelihood restoration program, supported by adequate budget is in place to help displaced persons improve or at least restore their incomes and livelihoods. There will be project management unit with safeguards specialist to supervise the safeguards issues. Additionally, the DRRD/MOC will be assisted by DDIS consultant which will have safeguards experts responsible for updating, implementing and monitoring the REGP. 59. Relevant project related information has been disclosed to all the affected persons, local communities and local authorities during project preparation through various individual and public consultations. Meaningful consultations with DP’s, communities and stakeholders will be carried out throughout the project cycle. A project specific consultation and participation plan has been prepared to guide the future consultation process. 60. Local Village Administrator (LVA). A grievance redress mechanism has been proposed in the REGP by setting up of grievance redress committees at various levels. The GRCs will be established in each district and will comprise of the village, district, and region levels. The GRCs will be assisted by a CRC. The CRC will be the district engineer (MOC/PMU) who will be responsible for responding promptly to complaints. The CRC will be assisted by a clerk for logging complaints. Complainants will be assisted by the LVA to submit complaints to the GRM. 61. LVA representative, and (v) a clerk from the GAD office. The GRC will be chaired by the LVA. The clerk from the GAD office will serve as secretary to the GRC. The village GRC will reserve the right to call upon contractors and/or technical experts as needed during the GRC proceedings. The GRC will be chaired by the LVA. The clerk from the GAD office will serve as secretary to the GRC. The village GRC will reserve the right to call upon contractors and/or technical experts as needed during the GRC proceedings. 62. The district level GRC will be composed of (i) the district administrator of the concerned district, (ii) district head of land records department, (iii) district head of agriculture department, (iv) district head of forestry department, (v) district chief of police, and (vi) the assistant director of roads (civil) department. The district administrator will chair the GRC and the assistant director of roads will serve as the secretary. The construction supervision consultant of the project and/or technical experts can be called upon as needed by the GRC. 63. The state level GRC will be composed of (i) State Ministers of the Ministries of Environment, Forestry, Mining and Transport, (ii) head of department land records, (iii) head of department agriculture, (iv) head of department forestry, (v) director of immigration and national registrations, (vi) head of department roads, and (vii) state administrator. The State Minister will chair the committee while the head of department roads will serve as the secretary.

31

64. The Department of Rural Roads, DRRD will be responsible for internal monitoring of REGP implementation compliance. Monitoring reports will be submitted to ADB semi-annually for review and disclosure. These reports will describe the progress of implementation of resettlement activities and any compliance issues and corrective actions if identified. These reports will closely follow the monitoring indicators agreed in the approved REGP.

VIII. GENDER AND SOCIAL DIMENSIONS 65. The gender categorization of the project is “Effective Gender Mainstreaming”. The Government will ensure that the Project is implemented in accordance with ADB’s Policy on Gender and Development (1998) to ensure that social benefits are maximized, and adverse impacts are mitigated. A gender action plan (GAP) has been prepared for the project, as shown in table 3 below, and will specifically implement the following pro-active gender actions / targets:

(i) undertaking gender-sensitive community-based programs for road safety,

HIV/AIDS, and human trafficking10; (ii) ensuring that at least 50% of those trained as community facilitators in such

programs are women; and (iii) ensuring that at least 50% of government staff that will be trained under the project

will be women. 66. To ensure that these and other gender issues are addressed and complied with, the project implementation consultant will include a gender and social development expert. Monitoring of the GAP will be reported to ADB on a semi-annual basis with other social safeguards issues. 67. Conflict sensitivity. The project does not finance anything directly in any of the conflict-affected areas in Myanmar. Within the Ayeyarwady and Magway regions, which have not faced any conflicts, the project will benefit all ethnic groups in a fair, unbiased and equal manner. Further, by connecting the rural areas in these two regions with Yangon, Nay Pyi Taw and the rest of country, there will be greater trade opportunities for conflict sensitive areas, which in turn could foster growth, reduce poverty and facilitate overall conflict resolution. 68. The project will benefit rural communities by improving access to social services, agricultural markets, reduced travel times, improved access to employment, and reduced accident rates.

10 The contractors will put in place prevention and assistance programs for their workers, and the project management

and DDIS consultants will oversee a community awareness program.

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GENDER OBJECTIVES GENDER ACTION

TARGETS RESPONSIBLE

AGENCIES COST ESTIMATE Output 1: Climate Resilient Roads Rehabilitated

1.1 Generate unskilled jobs in road construction for women

1.1.1 Contractors’ cumulative unskilled labor days will be at least 30% women, for all roads*.

DRRD and Contractors, with oversight fromDDIS Consultant

No additional costs in works contracts.

1.2 Ensure gender responsive social protection for the labor force during project implementation and maintenance

1.2.1 Core Labor Standardsincorporated in bidding docs and contracts. 1.2.2 Personal protective equipmentprovided to workers 1.2.3 Equal pay for same quantity ofwork for both men and women. 1.2.4 Awareness and preventionof sexual harassment, exploitation and abuse (SHEA) will be in incorporated in to workers induction training and monitoring of working conditions.

Contractors, with oversight fromDDIS Consultant

No additional costs in works contracts.

1.3 Ensure women equitably benefit from increased awareness in HIV and human trafficking awareness

1.3.1 Women represent at least 50% of local community members trained in HIV and Human Trafficking Awareness and Prevention through the project HTAPP.

HTAPP service provider with oversight and direction from DRRD, DDIS consultants and Contractor.

Provisional sum for service provider is USD100,000 to be contracted under works contracts.

Output 2: Rural Road Maintenance Management Improved

2.1 Women provided capacity in road maintenance

2.1.1 At least 50% of those trainedin Labor-Based Appropriate Technology arewomen (2019 baseline: 0)*

DRRD and DDISconsultant

Costed in DDISconsulting services

Output 3. Rural Road Safety Improved

3.1 Increase women’s involvement in and benefits from road safety awareness and enforcement

3.1.1 At least 50% of those trained as road safety facilitators in Safe School Zone implementation and in social enforcement in 4 project townships are women.*

DRRD and DDIS Consultants

Training forcommunity basedroad safety programcosted under DDISconsulting budget.

Project management and mainstreaming of gender related activities

DRRD appoint gender focal point for the project

Gender Action Plan and gender mainstreaming training provided to DRRD by DDIS.

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GENDER OBJECTIVES GENDER ACTION

TARGETS RESPONSIBLE

AGENCIES COST ESTIMATE Collect and analyze data

disaggregated by sex where relevant and integrate gender sensitive indicators (from the Design Monitoring Framework and Gender Action Plan) in the Project Performance Monitoring System.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

Impact the Project is Aligned with All-weather and safe road infrastructure developed (National Comprehensive Development Plan, 2011–2031)a11

Results Chain Performance Indicators with

Targets and Baselines

Data Sources and Reporting

Mechanisms Risks Outcome By 2026: Disaster-resilient road access for rural people in Ayeyarwady and Magway regions improved

a. 150 registered villages in the four project townships in Ayeyarwady and Magway, where the project roads traverse, gained access to all-weather roads (2019 baseline: 0)

b. Average daily traffic on project roads increased to 9,523 passenger car units (2019 baseline: 2,545 passenger car units)

c. Average travel time on project roads for motorized vehicles reduced by at least 18 minutes (2019 baseline: 41 minutes)

a. DRRD annual report

b-c Project completion report

Catastrophic climate events severely deteriorate road infrastructure.

Weak institutional capacity for rural roads limits implementation of the project as envisaged.

Outputs By 2026: 1. Climate-resilient

roads rehabilitated

1a. About 152 km of rural roads in four project townships improved to paved standard (2019 baseline: 0)

1b. Contractors’ cumulative unskilled labor days will be at least 30% women, for all contracts (2019 baseline: 0)

1a. DRRD annual report

1b. Project

completion report

Project roads suffer severe damage from unusual climate events during construction.

Government budget for operation and maintenance falls below minimum requirements.

2. Rural road maintenance management strengthened

2a. Core rural road network database—including routine, periodic, and emergency maintenance plans, with annual budget—established in the four project townships (2019 baseline: 0 townships)

2a. DRRD annual report

11 Government of Myanmar, Ministry of Transport and Communications. 2015. National Transport Sector Development

Master Plan. Nay Pyi Taw.

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Results Chain Performance Indicators with

Targets and Baselines

Data Sources and Reporting

Mechanisms Risks 2b. At least 50% of those

trained in labor-based technology are women in four project townships (2019 baseline: 0)

2b. Project completion report

Rural road safety strengthened

3a. All 43 schools in four project townships receive SSZ facilities and training (2019 baseline: 0)

3a. DRRD annual report

3b. At least 50% of those trained as road safety facilitators in SSZ implementation and in community enforcement in four project townships are women (2019 baseline: 0)

3b. Project completion report

B.

Key Activities with Milestones 1. Climate-resilient roads rehabilitated 1.1 DDIS consultants complete inception phase by Q3 2020 1.2 Complete detailed engineering design for all 152 km of project rural roads by Q1 2021 1.3 Complete bidding for civil works 1 and civil works 2 by Q4 2021 1.4 Complete bidding for civil works 3 by Q4 2022 1.5 Complete project design for high readiness of future projects by Q2 2023 1.6 Complete all civil works by Q2 2025 2. Rural road maintenance management improved 2.1 DRRD, through DDIS consultants, completes road database for 152 km of rural roads by Q2 2021 2.2 DRRD prepares routine, periodic, and emergency maintenance technical and budget plans for 152

km of project rural roads by Q1 2023 2.3 DRRD develops a pilot emergency management plan for one most disaster-vulnerable village for

natural disaster response to save lives and livestock by Q3 2024 2.4 DRRD, through the Ministry of Construction, requests sufficient budget from the Ministry of Planning

and Finance for 152 km of project rural road maintenance for 2025 and receives the full allocation by Q4 2024

3. Rural road safety strengthened 3.1 DDIS consultants draft a community-based road safety program for all four project townships by Q4

2021 3.2 All 43 schools in the four project townships implement SSZ by Q2 2025 Project Management Activities Recruit DDIS consultants by Q2 2020 Inputs Asian Development Bank: $45.40 million (loan) and $5.80 million (grant) Government of Myanmar: $1.21 million Assumptions for Partner Financing Not applicable

DDIS = detailed design and implementation supervision, DRRD = Department of Rural Roads Development, km = kilometer, Q = quarter, SSZ = safe school zone. Source: Asian Development Bank.

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C. Monitoring

69. Project performance monitoring. The PMU will establish a project performance monitoring system based on the DMF. The ADB inception mission will provide to the PMU a template for progress reports, and a checklist of the required data which will be updated and reported quarterly through (i) monthly reports from the DDIS, (ii) quarterly reports from the PMU with the necessary assistance from the DDIS, and (iii) after each ADB review mission. ADB, through the project performance reporting system will monitor the overall performance of the project.

70. Compliance monitoring. Compliance for all loan covenants (environmental safeguards, financial, economic and others) will be jointly monitored by MOC and ADB through quarterly updates provided by the PMU with the necessary assistance from DDIS as well as during regular ADB review mission. In addition, MOC and ADB will undertake a comprehensive midterm review after 2 years of project implementation. During the midterm review mission, ADB and MOC may agree on changes in both Project scope and implementation arrangements, as deemed necessary. 71. Safeguards monitoring. Compliance with environmental and involuntary resettlement safeguards will be included in the quarterly progress report to be prepared by the DDIS. The PMU, with necessary assistance as per reporting requirements listed in Annex 5, will also prepare separate semi-annual environmental and resettlement monitoring reports that will document status of EMP and REGP implementation. In addition, an external monitor will be engaged, if required depending on the sensitivity of impacts to be determined during the detailed design, for monitoring implementation of the resettlement and ethnic group plan, which will make periodic reports, as needed by the implementation of resettlement activities, and at least annually. 72. Resettlement and ethnic group plan implementation will be reported in the PMU’s semi-annual resettlement monitoring reports, with necessary assistance as per reporting requirements from DDIS. Implementation of the HIV/AIDS and human trafficking awareness and mitigation will be reported in the monthly and quarterly project progress reporting as well as in the semi-annual environment monitoring report. Resettlement and ethnic group plan implementation will be reported in the PMU’s semi-annual resettlement monitoring reports, with necessary assistance as per reporting requirements from DDIS. Implementation of the HIV/AIDS and human trafficking awareness and mitigation will be reported in the monthly and quarterly project progress reporting as well as in the semi-annual environment monitoring report. D. Evaluation

73. Following loan signing, a project inception mission will be fielded to confirm the working relationship between ADB and MOC/DRRD and PMU staff involved in the implementation of the project. Progress under the project will be reviewed every 6 months by ADB, following loan effectiveness. The reviews will address policy, institutional, administrative, organizational, technical, environmental, social, economic, financial, and other relevant factors that may have an impact on project performance and the project’s continuing viability. A comprehensive mid-term review is tentatively scheduled in mid-2021. Within 6 months of physical completion of the project MOC, with necessary assistance as per reporting requirements from DDIS, will submit a project completion report to ADB. In this report, MOC will evaluate the project performance based on indicators and targets stipulated in the design and monitoring framework and baseline profiling data collected during project preparation. Subsequently, ADB will field a mission to finalize its project completion report. Evaluation activities are summarized below.

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Table 18: Evaluation Activity Summary

Evaluation Activity Purpose Methodology Who are responsible

and involved Review Mission Review the progress of

the project and provide guidance to facilitate implementation

Site visit and meetings with MOC/DRRD and PMU officials, contractors and consultants twice a year

ADB MOC/DRRD

PMU

Mid Term Review Mission (mid-2021)

Review the progress of the project and make adjustments to facilitate implementation and successful project completion

Site visit and meetings with MOC/DRRD, MOPF and PMU officials, contractors and consultants

ADB MOC/DRRD PMU/MOPF

Project Completion Review

Evaluate the overall output of the project and its relevance and suitability

Site visit and meetings with MOC/DRRD and PMU officials

ADB MOC/DRRD

PMU

ADB = Asian Development Bank; DRRD = Department of Rural Road Development; MOC = Ministry of Construction; MOPF = Ministry of Planning and Finance; PMU = project management unit. Source: Asian Development Bank.

E. Reporting

74. The MOC will provide ADB with:

(i) DDIS consultants monthly contract progress reports; (ii) Quarterly progress reports in a format consistent with ADB's project performance

reporting system; each year, one of the quarterly reports will include consolidated annual information including: (a) progress achieved by output as measured through the indicator’s performance targets, (b) key implementation issues and solutions; (c) an updated procurement plan, if required, and (d) an updated implementation plan for the next 12 months;

(iii) Semi-annual safeguards (separately for social and environment) monitoring reports;

(iv) Compliance report on contract management plan; and (v) A project completion report within 6 months of physical completion of the project.

To ensure that projects will continue to be both visible and sustainable, project accounts and the executing agency audited financial statement together with the associated auditor’s report, should be adequately reviewed. consolidated annual reports including (a) progress achieved by output as measured

F. Stakeholder Communication Strategy

75. The Stakeholder Communications Strategy includes the ADB requirements for disclosure of project information in accordance with ADB’s SPS and Access to Information Policy. In addition, broader stakeholder communication will be carried out regarding the project with Government, communities in the project areas, civil society and where applicable, the media. 76. This PAM provides details of the project disclosure, monitoring and reporting requirements for safeguards policies on environment and resettlement. The MOC will post all relevant

38

information on its website. The website will include disclosure information requirements, as well as information regarding the bidding process, bidders, contract awards, use of funds disbursed under the project, and physical progress. The Project will allow ADB’s Public Communication Policy and its guidelines on the disclosure and exchange of information. 77. Information of the project will also be communicated with the Government through the PMU, DRRD and MOC. Relevant government officials in regions, townships and villages will be briefed on the project, and provided with written information (in Myanmar language and other languages deemed appropriate to ensure access of local communities to the information) on key project components and relevant requirements pertaining to ADB safeguards, stakeholder communication, and grievance redress procedures. 78. Stakeholder outreach meetings will be held in the project area to update local communities with project progress and information dissemination. Community leaders and officials will be involved to help ensure the consultative process is productive. Printed communication materials in Myanmar and other appropriate local languages will be provided to community members, describing, in language understandable to them (including low-literacy audience), the scope of the project, governing ADB policies and procedures, benefit entitlements, and/or other relevant matters. Information on project process, HIV/AIDS, safe working conditions will be provided as documented in the civil works contracts. Where required the communication material will be translated to Myanmar language. A basic tracking system will be maintained to record consultation activities, the provision of project information, to register concerns and/or complaints received, and to track follow-up action. 79. Where appropriate, project progress will be shared with local and national media. 80. Project’s communication plan is in Supplementary Appendix. A project focal point, with full name and contact information, will be designated for regular contact with affected people and other interested stakeholders. Any possible communication capacity deficits will be identified, and capacity building for key government staff in the development and implementation of stakeholder communication strategies can be combined with broader ADB-supported capacity building support to maximize resource utilization.

X. ANTICORRUPTION POLICY

81. All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the Executing Agency and all project contractors, suppliers, consultants, and other service providers.12 Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.13 becomes aware or has a reasonable suspicion that any member of the Borrower or executing agency has engaged in corrupt or fraudulent practices (as defined in ADB’s Anticorruption Policy) under or in connection with the Project or the loan/grant, the Borrower shall take such timely and appropriate action satisfactory to ADB to investigate and/or remedy the situation. 82. In addition to these requirements, to deter corruption and increase transparency, the Borrower shall ensure that the Executing Agency shall make use of its existing website or create a Project website within 3 months from Effective Date, accessible by the public, to disclose various

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

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information concerning the Project including general information about the Project, public procurement related to the Project, Project progress and contact details in English and Myanmar language. The website shall also provide a link to ADB’s Integrity Unit for reporting to ADB any grievances or allegations or corrupt practices arising out of the Project and Project activities. For each contract, the website shall include information on, among others, the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded, and list of Goods, Works and Consulting Services. The Executing Agency shall permit any bidder to request an explanation as to why a bid was unsuccessful and the Executing Agency shall respond promptly. The website shall be updated regularly. In addition to the web-based disclosure, the stakeholders shall be provided by the Executing Agency with detailed information on procurement on public notice boards in their respective areas. 83. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the project.

XI. ACCOUNTABILITY MECHANISM

84. be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism..14

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

85. The PAM will be subject to change after ADB’s Board approval of the project and during the period of project implementation. All revisions and updates of the PAM should be recorded in this section to provide a chronological history of the changes to the implementation arrangements recorded in the PAM.

14 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

40 Annex 1

TECHNICAL DESCRIPTION OF THE PROJECTS

C. The Project Area and Proposed Roads

1. The project area is located in Myanmar’s Ayeyarwady and Magway Regions. It consists of four townships, Maubin and Pantanaw in the Ayeyarwady Region and Myothit and Natmauk in the Magway Region. The former region is in the Ayeyarwady delta, characterized by low flat terrain and an extensive waterway network, and with a substantial population. The latter region is much drier and characterized by flat to rolling terrain, with few permanent watercourses, and is more sparsely populated.

2. Due to increasing disaster risks and climate change, the Ayeyarwady area has frequent flood damage due to rainy season and traffic disruption, which is a severe area for local residents. In the case of disasters triggered by natural hazards such as floods and typhoons, roads are cut off and houses are flooded and local residents lose their homes.

3. As is the situation throughout most of Myanmar, the local road network in the area is not well developed. There are few all-weather roads, meaning that for much of year travel away from the highway network is difficult, and often impossible. In essence, Myanmar lacks the essential third level in its national highway network

4. The proposed project objective is to commence a program of developing such a network, in cooperation with the Government and several multilateral and bilateral funding agencies.

5. The initial project roads extend to about 250 km, 60 km for each township. The roads were selected through a systematic analysis of several factors, which included population served, the number of villages along the road, connections to highways and to other rural roads, condition, likely economic viability, and others. D. Current status around the route section 6. Ayeyarwady Region. In Ayeyarwady Pantanaw and Maubin the flow regime in the vicinity of all the roads is dominated by the large regional flows in the adjacent Ayeyarwadi River and its complex associated distributaries. Under this regime discharges through culverts and bridges cannot be determined using the slope/catchment area/IDF approach that was appropriate for the northern Natmauk and Myothit townships. Indeed many of the crossings associated with the RRAP road in Pantanaw and Myothit reverse their flow as the flood plain recharges and discharges seasonally according to the level of flow of the Ayeyarwadi River. In the southern townships design is largely based on improvement of crossings using existing crossing openings as a template size for new crossings unless location information suggests that the crossing is too low. However, the RRAP roads in Ayeyarwady are generally of adequate elevation as flooding of land adjacent to either side of the roads occurs most years and roads are mostly already elevated on embankments to avoid annual flood level.

Annex 1 41

Figure 1 MBN 005, which is difficult to drive even during the dry season

Figure 2 MBN 039 where road slope collapsed due to river flooding

7. Magway Region. In Magway Region the drainage crossing were required for local rivers as well a local culvert crossings for agricultural delivery and return drainage. Crossing opening are determined by local flood conditions. For the river crossings at bridges and larger culverts, opening sizes have been estimated using a slope/catchment area/rainfall intensity-duration-frequency relationship for design storms to estimate flood discharges. For smaller culvert openings which are in the majority of the crossings and are often for agricultural purposes, it is not generally possible to measure the catchment areas to determine flood discharges. The

42 Annex 1

recommendations at these crossings is for openings at least as big as existing crossings with a minimum size to allow clearance of debris. Box culverts of 1m x 1m cross sections are recommended as minimum should pipe culverts be installed at any location then a minimum diameter of 1m is recommended. The minimum size is to facilitate the clearance of silt and debris that may build up in culverts. Smaller cross - sections than this are often impossible to clear once blocked due to restricted access.

Table 1: The projects roads proposed No Road Name Start point

village End point

village Length

(km) Ayeyarwady Region 1 MBN 004 Aung Hate Kyawl Done 16.3 2 MBN 019 HtaNeeYwar lay Zee Kone, Ba Lwal 9.9 3 MBN 005 Aung Hate Kan Kone 11.7 4 MBN 028 Waryone Gayat Shwetaung Mhawe 12.0 5 MBN 039 Htake Wasu Wal Daunt 12.1 6 PTN 008 Inn Ma Kayay Kan 10.0 7 PTN 005 Kyuan Date Pyant Lin 10.3 8 PTN 012 Dala Mainma Pyay 4.6 9 PTN 011 Bayargyi Daung Inn Takaw 10.0 10 PTN 031 Padauk Su, Kyone Ta

Naung Yone Chaung 4.6

11 PTN 019 Kyone Tanaung Kyone Pataw 14.1 Magway Region 12 NMK 088 KapaungKonegyi KyaukOKone 13.9 13 NMK 003 PadaukNgoteGyi TaMonePin 16.3 14 MYT 044 SuTatGyi MoeKaung 6.2 Total Ayeyarwady 115.6 Total Magway 36.4 Total proposed project road length 152.0

Source: Asian Development Bank. E. Technical Matters 8. Road Design. In consideration of the varying ground and drainage conditions of the sub-project roads, three typical cross section types have been selected as follows:

· Flexible pavements – Double Bituminous Surface Treatment (DBST) · Flexible pavements – Penetration Macadam (PENMAC) · Rigid pavements – Concrete (non-reinforced)

9. For Ayeyarwady Region’s roads of approximately 116 km in total length, the road rehabilitation will be only within the existing road widths. The existing road width varies from 1.8 meters (m) as the minimum to 2.8 m. The section of 1.8 m is a short section of about 40 m in length. This section may require a strip of 1.2 m x 40 m land acquisition to have the road width about 3.0 m. Other sections of this road have varying widths of 2.6 m, 2.8 m, and 3.0 m, but generally most sections are uniformly 3.0 m in width. With this approach of varying widths, the proposed project may have almost zero resettlement impacts on all 116 km of Ayeyarwady roads.

Annex 1 43

10. As for Magway Region’s roads, the approach is to select about 36 km of roads in total length to make a total of 152 km proposed for rehabilitation under the proposed project. These 36 km of roads has minor resettlement impacts only (i) one road with fences of about 100 m on both sides; and (ii) another road which has 3 palm trees standing in the middle of road. These impacts need be included as eligible for compensation with associated minor land acquisition. No persons are therefore affected. 11. Typical cross sections. The typical cross sections are supplemented by additional side treatment/construction to take account of local surroundings – such as densely settled villages, alignments in close proximity to water channels and areas with minimal scope for positive surface water discharge. The side treatment options are shown in Figure 4. Final selection of supplementary side construction will be made by the Engineer when setting the centerline of the alignment for rehabilitation. The general application of side treatments is shown below.

Table 1: The general application of side drain treatments

Source: Asian Development Bank.

Figure 1: Typical cross section Type 1-DBST general section (Carriageway 3.0 m, Shoulder 1.0 m)

A Oxcart Track For use in open field areas and flat terrain with significant oxcart traffic in Magway Region.

B Masonry Side Drains For narrow village areas with possibility of constructing open self-draining side drains in stone masonry works.

C Reinforced Concrete Side Drains

For narrow built-up village areas with no availability of good quality stone masonry, or where cover slabs are required for access to adjacent properties.

D Retaining Walls If it is not possible to construct a side drain due to low longitudinal gradients a small retaining wall may be used instead.

3000

5000Roadway

1:1.5

? OF ROAD

1500 1500

Carriageway

44 Annex 1

Figure 2: Typical cross section Type 2-PENMAC general section (Carriageway 3.0 m, Shoulder 1.0 m)

Figure 3: Typical cross section Type 3- concrete general section (Carriageway 3.0 m, Shoulder 1.0 m)

3000

5000

1:1.5

? OF ROAD

1500 1500

Spec Clause 3.2

Spec Clause 3.1

Spec Clause 2.7

Penmac 75 mm

Aggregate Base Course 150 mm

SUB-Base 200 mm

Selected Subgrade Material 300mm

Spec Clause 4.8

3000

1500 1500

5000

Existing roadTo be compacted

Cement Stabilised Base

Shoulder 1000

Shoulder 1000

Class B1 Concrete Pavement 200 mm

Cement Stabilised Base 200 mm

Selected Subgrade Material 300mm Spec Clause 2.7

Spec Clause 3.3

Spec Clause 5.1.2.2Spec Clause 2.6

Annex 1 45

Figure 4: Typical Side Treatment Cross Sections

46 Annex 1

12. Alignment. Horizontal alignment planed the linearity of the existing roads in order to avoid interference with the houses arranged along the roads and to minimize damage to the local residents.

13. Pavement Design. The pavements were designed according to the British “Overseas Road Note 31”, for flexible pavement sections, and AASHTO 93 method for rigid pavement. Pavement structures have been selected to enable a 10-year design life for DBST and macadam, and 20 years for concrete. The available traffic counting study shows an extremely small number of vehicles. To make the pavement design viable the following traffic was adopted:

• For rigid pavement: 5.0 x 105 Equivalent Standard Axle Loads (ESAL) • For flexible pavement: 2.5 x 105 ESAL

14. The flexible pavement was designed to be constructed with a bituminous dressing surface, DBST or PENMAC, and granular base and sub-base. The rigid pavement was designed to be constructed in plates with dimensions of 6.00 x 3.00 m. The transversal joint will be constructed with a combination of dowel bars and plates interlocking for an efficient load transfer and prevent water pumping and sealed. The base layer will be in cement treated gravel, an erosion resistant material. The shoulders will be constructed with cement treated gravel, same material used for base, to reduce the surface erosion and improve the concrete confinement, extending its service life and reducing maintenance. The concrete surface will receive a transverse texture to improve adherence and safety, and better drainage of raining water. The design considered the past experience with similar projects, especially regarding the quality control.

15. Bridges and Culvert Design. Bridges on the project roads for construction under RRAP have been designed based on the Ministry of Construction’s standards for single lane. They consist of reinforced concrete decks and substructures on bored concrete pile foundations, in the Ayeyarwady Region, where soils are weak, and on spread concrete footings in the Magway Region, where the ground is typically stronger. Single span bridges will be 9m and 12m as standard and longer structures will combine permutations of the standard spans to achieve the required total. The combined span arrangements are as follows:

Table 3: The combined span arrangements Code Span Arrangement Total Span

A 1 x 9 m – single span 9 m

B 1 x 12 m – single span 12 m

C 2 x 9 m – double span 18 m

D 2 x 12 m – double span 24 m

E 3 x 9 m – triple span 27 m

F 2 x 9 m + 1 x 12 m – triple span 30 m

G 3 x 12 m – triple span 36 m

H 2 x 9 m + 2 x 12 m – multi span 42 m

I 4 x 12 m – multi span 48 m

Annex 1 47

F. Road Safety Features

16. Although traffic volumes using most of the project roads will be low, the roads are single lane and they will pass through often closely settled villages, where surfaced roads typically serve many purposes. Road safety features to be provided will include (i) speed bumps either side of a village, and within a village if it is relatively long, accompanied by solar-powered flashing lights; (ii) signage at village entry points and where a road hazard exists, such as a sharp curve; (iii) guard rail at bridge approaches; and, where feasible, widened pavements to allow the safe passing of vehicles. 17. Given the improved road conditions to paved standards it is highly likely the road users will be exposed to safety risks due to increased speeds of motorized vehicles. Also, traffic is expected to be increased as well. To mitigate these risks this output will introduce a community-based road safety program. The project will also introduce emergency post-crash response to avoid preventable fatality, disability and limit the severity. While essential road safety engineering elements will be included in the detailed design, given that majority of crashes are due to road user behavior, this proposed program will focus on road user education and enforcement. The output also needs to focus on the sustainability of the community-based road safety program even after the construction period to make the local community practices road safety as a daily routine activity in their lifestyles.

48 Annex 2

FINANCIAL MANAGEMENT ASSESSMENT QUESTIONNAIRE (FMAQ)

DRRD officials met on 29 January 2018: · Ms Tin Moe Myint – Deputy Director General, Administration Directorate · Mr Ye Khaung Htun – Director, Finance & Accounts Division · Mr Myint Oo – Deputy Director General, Construction Directorate · Ms Aye Aye Soe – Director, Planning & Statistics Division

MOC officials met on 2 February 2018: · Mr Kyaw Soe – Director, Internal Audit Unit · Mr Thu Raitun – Deputy Director, Internal Audit Unit

DRRD officials met on 11 April 2019: Ms Tin Moe Myint – Deputy Director General, Administration Directorate Mr Tun Wai – Chief Engineer, Department of Rural Road Development Mr Ye Khaung Htun – Director, Finance & Accounts Division Mr Soe Soe Oo – Director, Department of Rural Road Development

Table: Financial Management Assessment Questionnaire

Topic Response

1. Implementing Agency (IA) 1.1 What is the entity’s legal status / registration? The Department of Rural Road Development

(DRRD) was established by the Government of Myanmar (GOM) in July 2017 as a new entity under the Ministry of Construction (MOC). Before then, the management of rural roads rested with the Department of Rural Development (DRD) under the Ministry of Agriculture, Livestock and Irrigation (MOALI).

1.2 How much equity (shareholding) is owned by the Government?

N.A.

1.3 Obtain the list of beneficial owners of major blocks of shares (non-governmental portion), if any.

N.A.

1.4 Has the entity implemented an externally-financed project in the past? If yes, please provide details.

Yes. DRRD is currently implementing the following externally-financed projects: · KfW – Rural Roads Rehabilitation

Program; Rural Development Program Phases 1-4; Rural Electrification Program.

· World Bank – National Community Driven Development Program; Flood and Landslide Emergency Recovery Project.

· JICA – A small-scale village infrastructure project and a local agricultural support project.

Annex 2 49

Topic Response The Rural Roads and Access Project will be DRRD’s first ADB-financed project.

1.5 Briefly describe the statutory reporting requirements for the entity.

DRRD is required to prepare monthly and quarterly reports (submitted to the Ministry of Planning and Finance (MOPF)) and annual report (to the Office of the Auditor General (OAG)). All reports are first submitted to the MOC for approval.

1.6 Describe the regulatory or supervisory agency of the entity.

MOC.

1.7 What is the governing body for the project? Is the governing body for the project independent?

MOC will be the executing agency (EA) and DRRD the implementing agency (IA). DRRD will establish a dedicated Project Management Unit (PMU) in its head office, and Project Implementation Units (PIUs) will be set up within township offices. The PMU will be responsible for project implementation and project management, including compliance with ADB disbursement and reporting procedures. It will be led by a Chief Engineer as Project Director, and Assistant Directors will lead each sub-project. The Project Director will report directly to the Director General of DRRD and to MOC. The PMU is independent in its project implementation and management functions.

1.8 Obtain current organizational structure and describe key management personnel. Is the organizational structure and governance appropriate for the needs of the project?

DRRD currently consists of three directorates (Administration, Construction and Maintenance) that each have two departments (Finance & Administration, and IT, Legal & Mechanical; Planning, R&D, Inspection & Quality Control, and Design & Construction; Road & Bridge Maintenance, and Local Offices) with a total of 13 divisions in the head offices as well as 17 state/region offices, 67 district offices and 291 township offices. DRRD’s staff nomination is 3,192 (426 in the head office and 2,766 in the sub-national offices), but only 790 positions are currently filled. 200 staff from other GOM entities have been given transfer orders, which will bring DRRD’s actual staffing to 990 within 2018. An organizational chart of DRRD, showing the staff nominations, is included as Appendix B in the FMA report. The PMU will manage the project and implement it through the PIUs. The planned organizational set-up and the related governance arrangements are considered appropriate for the needs of the project.

50 Annex 2

Topic Response

1.9 Does the entity have a Code of Ethics in place? The 2013 Civil Service Personnel Act includes some Code of Conduct aspects. Also, as per the 2013 Anti-Corruption Bill, government officials must adhere to a national code of ethics, which includes a requirement to declare their assets. DRRD staff must abide by these rules.

1.10 Describe (if any) any historical issues reports of ethics violations involving the entity and management. How were they addressed?

None.

2. Funds Flow Arrangements 2.1 Describe the (proposed) project funds flow

arrangements in detail, including a funds flow diagram and explanation of the flow of funds from ADB, government and other financiers, to the government, EA, IA, suppliers, contractors, ultimate beneficiaries, etc. as applicable.

Please refer to the attached funds flow diagram.

2.2 Are the (proposed) arrangements to transfer the proceeds of the loan (from the government / Finance Ministry) to the entity and to the end-recipients satisfactory?

Yes.

2.3 Are the disbursement methods appropriate? Yes. 2.4 What have been the major problems in the past

involving the receipt, accounting and/or administration of funds by the entity?

No major problems

2.5 In which bank will the Advance Account (if applicable) be established?

Myanmar Foreign Trade Bank

2.6 Is the bank in which the advance account is established capable of −

· Executing foreign and local currency transactions?

· Issuing and administering letters of credit (LC)? · Handling a large volume of transaction? · Issuing detailed monthly bank statements

promptly?

Yes.

2.7 Is the ceiling for disbursements from the advance account and statement of expenditure (SOE) appropriate/required?

Yes. The ceiling is appropriate.

2.8 Does the (proposed) project implementing unit (PIU) have experience in the management of disbursements from ADB?

Yes. Three months experience as facilitator.

2.9 Does the PIU have adequate administrative and accounting capacity to manage the advance fund and SOE procedures in accordance with ADB’s Loan Disbursement Handbook (LDH)? Identify any concern or uncertainty about the PIU’s administrative and accounting capability which

Yes.

Annex 2 51

Topic Response would support the establishment of a ceiling on the use of the SOE procedure.

2.10 Is the entity exposed to foreign exchange risk? If yes, describe the entity’s policy and arrangements for managing foreign exchange risk.

Yes. There is a difference between exchange rate of Ministry of Planning and Finance, exchange rate of Central Bank of Myanmar and ADB’s exchange rate, for disbursements by local currency.

2.11 How are the counterpart funds accessed? DRRD’s annual budget is approved by Parliament. Accessing funds follows a standard process of requesting and receiving funds from MOC as approved by MOPF.

2.12 How are payments made from the counterpart funds?

Payments are made in cash from the counterpart funds.

2.13 If project funds will flow to communities or NGOs, does the PIU have the necessary reporting and monitoring arrangements and features built into its systems to track the use of project proceeds by such entities?

Yes. Payment can be made after DRRD’s approval.

2.14 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor or material), are proper guidelines and arrangements formulated to record and value the labor or material contributions at appraisal and during implementation?

Not yet as of now.

3. Staffing 3.1 What is the current and/or proposed organizational

structure of the accounting department? Attach an organization chart.

DRRD’s Finance & Accounts Division in the head office has five sections: Budget, Accounts, Payroll, Administration, and Work Inspection. There are 28 positions of which 9 are currently filled. These are: · 1 Director · 1 Deputy Director · 2 Accounting Officers · 2 Accountants, Class 2 · 1 Accountants, Class 3 · 2 Accountants, Class 4 The 19 vacancies consist of: 1 Deputy Director, 1 Accounting Officer and 17 Accountants. DRRD expects that 12-13 of the vacant positions will be filled during 2018. An organizational chart of the Finance & Accounts Division is included as Appendix B in the FMA report. The finance and accounts functions at the sub-national levels have a staff nomination of 271 of which about 60 are currently filled.

52 Annex 2

Topic Response

3.2 Will existing staff be assigned to the project, or will new staff be recruited?

The number of staff in the PMU is yet to be decided, but is likely to be 7-8, including support staff. It is expected that existing staff from DRRD’s Finance & Accounts Division will be assigned to the PMU, i.e. new staff will not be recruited.

3.3 Describe the existing or proposed project accounting staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key existing accounting staff.

Two PMU positions will be created to manage finance and accounting tasks. Job descriptions will be prepared, which will outline requirements, duties, responsibilities, lines of supervision, and skills required to perform the specific roles.

3.4 Is the project finance and accounting function staffed adequately?

The PMU finance and accounting function will be staffed adequately once the PMU is set up and the positions filled.

3.5 Are the project finance and accounting staff adequately qualified and experienced?

The staff of DRRD’s Finance & Accounts Division are appropriately qualified and experienced to undertake their current tasks. Some staff have experience from other externally-financed projects, but none are familiar with ADB procedures and requirements. The two accountants will be appointed to the PMU have relevant experience, including from implementing other externally-financed projects. The two staff will require adequate tools to be available at project-start (including a project-specific Financial Management Manual) and training in ADB procedures and requirements (i.e. the application of ADB’s Loan Disbursement Handbook (LDH)). The Financial Management Manual should be developed and the training organized by the implementation management consultants to be engaged under the project.

3.6 Are the project finance and accounting staff trained in ADB procedures, including the disbursement guidelines (i.e., LDH)?

See # 3.5 above.

3.7 What is the duration of the contract with the project finance and accounting staff?

The PMU staff will be engaged for the period of the project (i.e. 2018-2022).

3.8 Identify any key positions of project finance and accounting staff not contracted or filled yet, and the estimated date of appointment.

DRRD plans to nominate existing staff to the PMU, hence new staff may not be required.

3.9 For new staff, describe the proposed project finance and accounting staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions.

See # 3.3 above.

3.10 Does the project have written position descriptions that clearly define duties, responsibilities, lines of

See # 3.3 above.

Annex 2 53

Topic Response supervision, and limits of authority for all of the officers, managers, and staff?

3.11 What is the turnover rate for finance and accounting personnel (including terminations, resignations, transfers, etc.)?

DRRD was established in July 2017. The 9 current staff of the Finance & Accounts Division come from similar positions in DRD (2) and in Department of Highways (DOH). Staff turnover in DOH’s Finance Section has historically been low. Transfers are possible/allowed after two years for positions in urban areas and three years for positions in rural areas. However, staff can choose to remain in the positions.

3.12 What is training policy for the finance and accounting staff?

DRRD has not (yet) established a training policy for its staff.

3.13 Describe the list of training programs attended by finance and accounting staff in the last 3 years.

The World Bank and ADB have during 2017 held workshops for the staff of the Finance & Accounts Division to inform about project procedures and requirements.

4. Accounting Policies and Procedures 4.1 Does the entity have an accounting system that

allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds (in particular, the legal agreements with ADB)? Will the project use the entity accounting system? If not, what accounting system will be used for the project?

DRRD’s accounting and financial reporting approach is based on that of the GOM, cf. MOPF’s 2017 Financial Rules & Regulations. Procedures are manual and supplemented by spreadsheets for reporting purposes. The PMU will set up a separate financial management system for the use of the project. This will allow for allocating expenditures in accordance with relevant components, disbursement categories and sources of funds.

4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained?

Yes. All invoices are submitted by suppliers, contractors and consultants at the field level where they are reviewed and approved by the Chief Engineer of the specific project. Payments using GOM funds are processed by DRRD’s Finance & Accounts Division, including by comparing with plans and budgets, and then reviewed by DRRD’s Deputy Director General (Administration) and DRRD’s Director General who authorize payments. Payments using ADB funds will be processed by the PMU. Invoices are submitted to the PMU (PIUs at the township-level), which will review these and send them to DRRD’s Deputy Director General (Administration) and DRRD’s Director General for payment approval. Transactions below $10,000 will be made by cheque from the project advance account. Transactions above $10,000 will be

54 Annex 2

Topic Response made upon the PMU’s request to ADB as direct payments to the designated beneficiaries (i.e., suppliers, contractors, or consultants).

4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? Obtain a copy of the chart of accounts.

The PMU will for the specific accounting and financial reporting needs of the project apply the same chart of accounts (economic codes) as the Finance & Accounts Division (i.e. that of the Government of Myanmar).

4.4 Are cost allocations to the various funding sources made accurately and in accordance with established agreements?

The use of a separate financial management system for the use of the project will enable the PMU to allocate expenditures in accordance with funding sources, if relevant.

4.5 Are the General Ledger and subsidiary ledgers reconciled monthly? Are actions taken to resolve reconciliation differences?

Yes. They are reconciled monthly and must balance.

4.6 Describe the EA’s policy for retention of accounting records including supporting documents (e.g., ADB’s policy requires that all documents should be retained for at least 1 year after ADB receives the audited project financial statements for the final accounting period of implementation, or 2 years after the loan closing date, whichever is later). Are all accounting and supporting documents retained in a defined system that allows authorized users easy access?

Accounting records will be kept for 3 years by DRRD’s Finance & Accounts Divisions. They are thereafter retained in storage by the GOM for 20 years.

4.7 Describe any previous audit findings that have not been addressed.

None.

Segregation of Duties 4.8 Are the following functional responsibilities

performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; (iii) custody of assets involved in the transaction; (iv) reconciliation of bank accounts and subsidiary ledgers?

DRRD aims to divide the functional responsibilities as relevant between different staff in DRRD’s Finance & Accounts Division and in other DRRD entities. However, due to the current shortage of staff, there are occasionally functional overlaps between staff.

4.9 Are the functions of ordering, receiving, accounting for, and paying for goods and services appropriately segregated?

Yes. Different units or persons undertake ordering and receiving (technical units), while payment and accounting is done by the Finance & Accounts Division. For the project, ordering, receiving, payment and accounting will be undertaken by different persons within the PMU.

Budgeting System 4.10 Do budgets include physical and financial targets? Yes. Financial budgets are matched with

physical targets. 4.11 Are budgets prepared for all significant activities in

sufficient detail to allow meaningful monitoring of subsequent performance?

Yes. Budgets are prepared for all relevant activities of DRRD and in sufficient detail so as to allow for monthly monitoring,

Annex 2 55

Topic Response

4.12 Are actual expenditures compared to the budget with reasonable frequency? Are explanations required for significant variations against the budget?

Yes. Actual expenditures are compared to the budget on a monthly basis. MOC is required to report and explain significant variations to the MOPF and obtain approval.

4.13 Are approvals for variations from the budget required (i) in advance, or (ii) after the fact?

Approvals for variations from the budget must be sought from MOPF in advance.

4.14 Is there a ceiling, up to which variations from the budget may be incurred without obtaining prior approval?

10%.

4.15 Who is responsible for preparation, approval and oversight/monitoring of budgets?

DRRD prepares budgets, and MOC reviews them and submits them to the MOPF, which in turn submits them to Parliament through the President’s Office for approval.

4.16 Describe the budget process. Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets?

The budget process as regards payroll and other recurrent items is undertaken by the head office and based on the existing budget with incremental changes to take into account changes in staffing numbers and planned activities. The budget process as regards capital expenditure (construction, machinery and office equipment) is based on the Road Development Committees (RDCs), comprising local DRRD staff and township representatives, assessing the activities considered necessary on local road networks (maintenance, rehabilitation and new construction). These are prioritized based on population, households and services data. The township plans are compiled at the district-level, where costs are estimated based on local unit costs, and then submitted to the state/region-level before being submitted (by end-September) via DRRD’s head office and the MOC to MOPF for approval (by end-January). It does not appear that any ceilings are provided/used in the budget process.

4.17 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals?

Is there evidence of significant mid-year revisions, inadequate fund releases against allocations, or inability of the EA to absorb/spend released funds?

Is there evidence that government counterpart funding is not made available adequately or on a timely basis in prior projects?

What is the extent of over- or under-budgeting of major heads over the last 3 years? Is there a consistent trend either way?

The project plans and budgets are currently being developed by ADB’s PPTA team. There are no significant budget revisions during the fiscal year. No, except that the transition in 2017/18 from DRD to DRRD did affect the timely availability of GOM funding to some extent. There has been no over-/under-budgeting.

Payments

56 Annex 2

Topic Response

4.18 Do invoice-processing procedures require: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports? (iv) Checking the accuracy of calculations? (v) Checking authenticity of invoices and supporting documents?

The processing of invoices is based on a review by the Chief Engineer responsible for the specific project and includes comparison with the plans (physical quantities/measures) and budgets (financial figures). The processing by the Finance & Accounts Division furthermore includes checking invoices as regards quantities and receipts vis-à-vis contracts.

4.19 Are all invoices stamped PAID, dated, reviewed and approved, recorded/entered into the system correctly, and clearly marked for account code assignment?

Yes. All invoices are reviewed, approved, marked with the relevant account code, and thereafter recorded as required.

4.20 Do controls exist for the preparation of the payroll? Are changes (additions/deductions/modifications) to the payroll properly authorized?

Yes. Payroll is managed by DRRD’s Finance & Accounts Division. The monthly payroll list as well as changes to the payroll is reviewed and approved by the Director General. Payroll payments are made partly in cash, partly as transfers to the bank account of the staff.

Policies And Procedures 4.21 What is the basis of accounting (e.g., cash, accrual)

followed (i) by the entity? (ii) By the project? (i) Cash. (ii) Cash.

4.22 What accounting standards are followed (International Financial Reporting Standards, International Public Sector Accounting Standards – cash or accrual, or National Accounting Standards (specify) or other?

National accounting standards. The OAG – through the Myanmar Accountancy Council (MAC) – sets the accounting and auditing policies for the public sector.

4.23 Does the project have adequate policies and procedures manual(s) to guide activities and ensure staff accountability?

The main accounting and financial reporting principles will be stated in the PAM. A Financial Management Manual for the PMU should be prepared by the project’s implementation management consultants who should also organize training for the staff to ensure accountability.

4.24 Is the accounting policy and procedure manual updated regularly and for the project activities?

The PMU’s Financial Management Manual should be updated as and when needed.

4.25 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting policy or procedure to be used by the entity?

Yes. DRRD follows the GOM’s accounting policy and procedures.

4.26 Are there written policies and procedures covering all routine financial management and related administrative activities?

The MOPF in 2017 issued new Financial Rules & Regulations, which replaces instructions from 1972 and 1994.

4.27 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them?

Yes.

Annex 2 57

Topic Response

4.28 Are manuals distributed to appropriate personnel? Yes. The MOPF’s 2017 Financial Rules & Regulations is available to the staff in DRRD’s Finance & Accounts Division.

4.29 Describe how compliance with policies and procedures are verified and monitored.

This is done by the OAG as part of its monthly and annual audits.

Cash and Bank 4.30 Indicate names and positions of authorized

signatories for bank accounts. Include those persons who have custody over bank passwords, USB keys, or equivalent for online transactions.

DRRD’s authorized signatories for bank accounts are the Director General and the Director of the Finance & Accounts Division.

4.31 Does the organization maintain an adequate and up-to-date cashbook recording receipts and payments?

Yes. DRRD maintains a cash book for recording receipts and payments.

4.32 Describe the collection process and cash handling procedures. Do controls exist for the collection, timely deposit and recording of receipts at each collection location?

Controls exist for the collection, timely deposit and recording of receipts.

4.33 Are bank accounts reconciled on a monthly basis? Or more often?

Is cash on hand physically verified, and reconciled with the cash books? With what frequency is this done?

Yes. No petty cash or cash on hand is allowed.

4.34 Are all reconciling items approved and recorded? Yes. 4.35 Are all unusual items on the bank reconciliation

reviewed and approved by a responsible official? Yes.

4.36 Are there any persistent/non-moving reconciling items?

N.A.

4.37 Are there appropriate controls in safekeeping of unused cheques, USB keys and passwords, official receipts and invoices?

DRRD does not use internet banking. The finance officer of the DRRD controls the safekeeping of unused cheques, official receipts and invoices.

4.38 Are any large cash balances maintained at the head office or field offices? If so, for what purpose?

No

4.39 For online transactions, how many persons possess USB keys (or equivalent), and passwords? Describe the security rules on password and access controls.

DRRD does not use internet banking.

Safeguard over Assets 4.40 What policies and procedures are in place to

adequately safeguard or protect assets from fraud, waste and abuse?

The GOM has the LAW regarding the safeguarding and protection of assets from fraud, waste, and abuse. The Internal audit Unit and OAG make regular auditing for protection of assets as well. The CPU (Corruption Prevention Units) are organized in each ministry under the guidance of Anti-Corruption Mission for the safeguarding and protection of assets.

58 Annex 2

Topic Response

4.41 Does the entity maintain a Fixed Assets Register? Is the register updated monthly? Does the register record ownership of assets, any assets under lien or encumbered, or have been pledged?

The DRRD maintains a Fixed Assets Register which is updated annually.

4.42 Are subsidiary records of fixed assets, inventories and stocks kept up to date and reconciled with control accounts?

Yes. Changes in fixed assets and stock are recorded as they occur.

4.43 Are there periodic physical inventories of fixed assets, inventories and stocks? Are fixed assets, inventories and stocks appropriately labeled?

Yes. Reviews of physical inventories of fixed assists and stock are undertaken annually. Fixed assets, inventories and stocks are labeled.

4.44 Are the physical inventory of fixed assets and stocks reconciled with the respective fixed assets and stock registers, and discrepancies analyzed and resolved?

Yes.

4.45 Describe the policies and procedures in disposal of assets. Is the disposal of each asset appropriately approved and recorded? Are steps immediately taken to locate lost, or repair broken assets?

The request for the disposal of assets needs to be approved by the DG.

4.46 Are assets sufficiently covered by insurance policies?

No. DRRD does not take out insurance cover.

4.47 Describe the policies and procedures in identifying and maintaining fully depreciated assets from active assets.

MOPF procedures are applied. The PMU will apply relevant procedures as required.

Other Offices and Implementing Entities 4.48 Describe any other regional offices or executing

entities participating in implementation. DRRD has 17 state/region offices, 67 district offices and 291 township offices. However, the project will be implemented at the township-level through dedicated PIUs.

4.49 Describe the staff, their roles and responsibilities in performing accounting and financial management functions of such offices as they relate to the project.

Qualified staff from the township offices will be appointed for the PIUs. The details in terms of job roles and responsibilities are yet to be formulated and documented in job descriptions.

4.50 Has the project established segregation of duties, controls and procedures for flow of funds and financial information, accountability, and reporting and audits in relation to the other offices or entities?

See # 4.49 above.

4.51 Does information among the different offices / implementing agencies flow in an accurate and timely fashion? In particular, do the offices other than the head office use the same accounting and reporting system?

Yes. It is noted, however, that a large number of positions at the sub-national levels are yet to be filled following the establishment of DRRD in July 2017.

4.52 Are periodic reconciliations performed among the different offices/implementing agencies? Describe the project reporting and auditing arrangements between these offices and the main executing/implementing agencies.

See # 4.49 above.

Annex 2 59

Topic Response

4.53 If any sub-accounts (under the Advance Account) will be maintained, describe the results of the assessment of the financial management capacity of the administrator of such sub-accounts.

It is yet to be decided whether sub-accounts under the advance account will be set-up at the PIUs. However, given the limited capacity of the township offices as well as the lack of experience with ADB procedures and requirements, it would seem most appropriate to maintain the advance account at the PMU in the head office.

Contract Management and Accounting 4.54 Does the agency maintain contract-wise accounting

records to indicate gross value of contract, and any amendments, variations and escalations, payments made, and undisbursed balances? Are the records consistent with physical outputs/deliverables of the contract?

Yes.

4.55 If contract records are maintained, does the agency reconcile them regularly with the contractor?

Yes. The PMU will similarly undertake this task.

Other 4.56 Describe project arrangements for reporting fraud,

corruption, waste and misuse of project resources. Has the project advised employees, beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property?

The PMU will establish appropriate procedures once set up and operational.

5. Internal Audit 5.1 Is there an internal audit department in the entity? No. However, there is an Internal Audit Unit

(IAU) in the MOC, which covers the ministry and all five departments, including DRRD.

5.2 What are the qualifications and experience of the internal audit staff?

The IAU has a total of 18 staff: 1 Director, 1 Deputy Director and 16 accountants. The staff have experience of GOM accounting functions, but do not have formal qualifications or training as internal auditors.

5.3 To whom does the head of the internal audit report? The IAU reports to MOC’s Audit Committee, which comprises the Permanent Secretary and the Director Generals of MOC’s five departments. The IAU Director and Deputy Director provide secretarial functions to the Audit Committee.

5.4 Will the internal audit department include the project in its annual work program?

No. The coverage of the IAU includes only GOM-funded activities, not externally-financed projects.

5.5 Are actions taken on the internal audit findings? Yes. The internal audit reports include observations and recommendations, which are generally implemented by all auditees.

5.6 What is the scope of the internal audit program? How was it developed?

An annual work plan is prepared by the IAU and approved by the Audit Committee. The

60 Annex 2

Topic Response plan covers a priority list of completed activities and projects for the audit year.

5.7 Is the internal audit department independent? No. The Audit Committee consists of the MOC’s senior management.

5.8 Do they perform pre-audit of transactions? No. 5.9 Who approves the internal audit program? The Audit Committee 5.10 What standards guide the internal audit program? The IAU assesses processes and procedures

of the auditees based on the existing FM and procurement rules and regulations. No internal audit guidelines or standards appear to be applied.

5.11 How are audit deficiencies tracked? The IAU undertakes follow-up vis-à-vis the auditees after one year.

5.12 How long have the internal audit staff members been with the organization?

The Director was transferred to the IAU end-2017. Other staff have been with the IAU for several years.

5.13 Does any of the internal audit staff have an IT background?

No.

5.14 How frequently does the internal auditor meet with the audit committee without the presence of management?

N.A. [The Audit Committee consists of the MOC’s senior management].

5.15 Has the internal auditor identified / reported any issue with reference to availability and completeness of records?

No.

5.16 Does the internal auditor have sufficient knowledge and understanding of ADB’s guidelines and procedures, including the disbursement guidelines and procedures (i.e., LDH)?

N.A. [Externally-financed projects are not covered by the work of the IAU].

6. External Audit – entity level 6.1 Is the entity financial statement audited regularly by

an independent auditor? Who is the auditor? Yes. The annual external audit of DRRD will be undertaken by the OAG.

6.2 Are there any delays in audit of the entity? When are the audit reports issued?

No. The fiscal year ends on 31 March. Audit reports are generally issued in September.

6.3 Is the audit of the entity conducted in accordance with the International Standards on Auditing, or the International Standards for Supreme Audit Institutions, or national auditing standards?

Yes. The OAG performs financial and compliance audits consistent with the audit standards of the International Organization of Supreme Audit Institutions (INTOSAI).

6.4 Were there any major accountability issues noted in the audit report for the past three years?

No.

6.5 Does the external auditor meet with the audit committee without the presence of management?

DRRD has no Audit Committee, but an Audit Committee is set up in MOC. It comprises the Permanent Secretary, Director Generals of MOC’s five departments and the Director of MOC’s Internal Audit Unit.The OAG does not meet with MOC’s Audit Committee.

Annex 2 61

Topic Response

6.6 Has the entity engaged the external audit firm for any non-audit engagements (e.g., consulting)? If yes, what is the total value of non-audit engagements, relative to the value of audit services?

No.

6.7 Has the external auditor expressed any issues on the availability of complete records and supporting documents?

No.

6.8 Does the external auditor have sufficient knowledge and understanding of ADB’s guidelines and procedures, including the disbursement guidelines and procedures (i.e., LDH)?

Yes.

6.9 Are there any material issues noted during the review of the audited entity financial statements that were not reported in the external audit report?

No.

External Audit – project level 6.10 Will the entity auditor audit the project accounts or

will another auditor be appointed to audit the project financial statements?

It is expected that the OAG will audit the project financial statements.

6.11 Are there any recommendations made by the auditors in prior project audit reports or management letters that have not yet been implemented?

N.A.

6.12 Is the project subject to any kind of audit from an independent governmental entity (e.g. the supreme audit institution) in addition to the external audit?

See # 6.10 above.

6.13 Has the project prepared acceptable terms of reference for an annual project audit? Have these been agreed and discussed with the EA and the auditor?

No. The ToR will be prepared and included in the PAM.

6.14 Has the project auditor identified any issues with the availability and completeness of records and supporting documents?

N.A.

6.15 Does the external auditor have sufficient knowledge and understanding of ADB’s guidelines and procedures, including the disbursement guidelines and procedures (i.e., LDH)?

Yes.

6.16 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented?

N.A.

[For second or subsequent projects] 6.17 Were past audit reports complete, and did they fully

address the obligations under the loan agreements? Were there any material issues noted during the review of the audited project financial statements and related audit report that have remained unaddressed?

N.A.

7. Reporting and Monitoring

62 Annex 2

Topic Response

7.1 Are financial statements and reports prepared for the entity?

Yes.

7.2 Are financial statements and reports prepared for the implementing unit(s)?

The PMU will prepare monthly, quarterly and annual financial statements.

7.3 What is the frequency of preparation of financial statements and reports? Are the reports prepared in a timely fashion so as to be useful to management for decision making?

DRRD’s Finance & Accounts Division prepares monthly, quarterly and annual reports. The time needed to prepare these is approximately 30 days, 25 days and 45 days, respectively.

7.4 Does the entity reporting system need to be adapted for project reporting?

No. The PMU will apply a system that is separate from that of DRRD (i.e. DRRD’s entity reporting system will not need to be amended).

7.5 Has the project established financial management reporting responsibilities that specify the types of reports to be prepared, the report content, and purpose of the reports?

Project financial management reporting responsibilities will be established in the Financial Management Manual to be developed for the PMU, and will be implemented once the PMU has been set up. The report templates will be similar to those applied by on-going ADB-financed projects in Myanmar (e.g. based on those used in DOH).

7.6 Are financial management reports used by management?

Yes.

7.7 Do the financial reports compare actual expenditures with budgeted and programmed allocations?

Yes.

7.8 How are financial reports prepared? Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means?

Financial reports are prepared manually as well as with the use of spreadsheets. PMU reports will be prepared using spreadsheets.

7.9 Does the financial system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data?

No. The PMU for the project will establish procedures so as to be able to compare financial information with the physical progress in the project activities.

7.10 Does the entity have experience in implementing projects of any other donors, co-financiers, or development partners?

Yes. See # 1.4 above. DRRD is currently implementing projects funded by KfW, JICA and the World Bank. All externally funded projects are implemented using PMUs/PIUs or with the support of implementation management consultants.

8. Information Systems 8.1 Is the financial accounting and reporting system

computerized? No.

8.2 If computerized, is the software off-the-shelf, or customized?

N.A.

Annex 2 63

Topic Response

8.3 Is the computerized software standalone, or integrated and used by all departments in the headquarters and field units using modules?

N.A.

8.4 How are the project financial data integrated with the entity financial data? Is it done through a module in the enterprise financial system with automatic data transfer, or does it entail manual entry?

N.A.

8.5 Is the computerized software used for directly generating periodic financial statements, or does it require manual intervention and use of Excel or similar spreadsheet software?

N.A.

8.6 Can the system automatically produce the necessary project financial reports?

N.A.

8.7 Is the staff adequately trained to maintain the computerized system?

N.A.

8.8 Do the management, organization and processes and systems safeguard the confidentiality, integrity and availability of the data?

N.A.

8.9 Are there back-up procedures in place? N.A. 8.10 Describe the backup procedures – online storage,

offsite storage, offshore storage, fire, earthquake and calamity protection for backups.

N.A.

64 Annex 3

PROCUREMENT PLAN

A. Basic Data

Project Name: Rural Roads and Access Project Project Number: 50218-002 Approval Number: …… Country: Myanmar Executing Agency: Ministry of Construction Project Procurement Classification: A Implementing Agency: Department of Rural Road

Development Project Procurement Risk: High Project Financing Amount: ADB OCR (Concessional Loan): $45.40 million ADB Special Fund Resources (Grant): $5.80 million Government: $1.21 million Total: $52.41 million

Project Closing Date: 31 December 2025

Date of First Procurement Plan: 12 September 2019

Date of this Procurement Plan: 12 September 2019.

Procurement Plan Duration (in months): 18 Advance Contracting: Yes e-Procurement: No B. Methods, Review, and Procurement Plan Except as ADB may otherwise agree, the following methods shall apply to the procurement of goods, works, non-consulting services, and consulting services.

Procurement of Goods, Works, and Non-consulting Services Method Comments

Open competitive bidding with international advertisement for works

Local contractors have limited capacity to implement road contracts above $4.0 million

Consulting Services

Method Comments Open competitive bidding with international advertising, using Quality- and Cost-Based Selection (QCBS).

One international consulting firm for Detailed Designs, Construction supervision and project implementation (DDIS) is required

C. Lists of Active Procurement Packages (Contracts) The following table lists goods, works, non- consulting services, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan’s duration.

Goods, Works, and Non-consulting Services

Package Number General Description

Estimated Value ($m)

Procurement Method

Review

Bidding Procedure

Advertisement Date

(quarter, year) Comments CW1 Civil Works for 6 Roads in Pantanaw Advertising:

International Number of contracts: maximum 7 Prequalification of Bidders: No

Lot 1: PTN 8 and PTN 11 4.62 OCB Prior 1S1E Q1,2021 Lot 2: PTN 5 and PTN 12 5.71 OCB Prior 1S1E Q1,2021 Lot 3: PTN 19 and PTN

31 4.20 OCB Prior 1S1E Q1,2021

CW2 Civil Works for 3 Roads in Magway Lot 1: NMK 88, NMK3,

MYT4 6.16 OCB Prior 1S1E Q1,2021

CW3 Civil Works for 5 Roads in Maubin Lot 1: MBN 4 and MBN 5 9.44 OCB Prior 1S1E Q1,2022

Annex 3 65

Goods, Works, and Non-consulting Services

Package Number General Description

Estimated Value ($m)

Procurement Method

Review

Bidding Procedure

Advertisement Date

(quarter, year) Comments Lot 2: MBN 28 and MBN

39 5.53 OCB Prior 1S1E Q1,2022

Domestic Preference: No Advance Contracting: No Bidding Documents: ADB SBD for Small Works

Lot 3: MBN 19 3.11 OCB Prior 1S1E Q1,2022

1S2E = single-stage:two-envelope, OCB = open competitive bidding, Q = quarter

Consulting Services

Package Number

General Description

Estimated Value ($m)

Selection Method Review

Type of Proposal

Advertisement Date (quarter,

year) Comments CS1 Detailed Design

and Implementation Supervision Consultant

5.1

QCBS Prior FTP Q2,2019 Type: Firm Quality-Cost Ratio: 90:10 Prequalification/ Short-listing of Firms: Yes Advance Contracting: Yes

FTP = Full technical proposal, Q = quarter, QCBS = quality- and cost-based selection D. List of Indicative Packages (Contracts) Required Under the Project The following table lists goods, works, non-consulting services, and consulting services contracts for which the procurement activity is expected to commence beyond the procurement plan duration and over the life of the project.

Goods, Works, and Non-consulting Services

Package Number

General Description

Estimated Value ($m)

Procurement Method Review

Bidding Procedure

Advertisement Date (quarter,

year) Comments NONE

Consulting Services Package Number

General Descriptio

n

Estimated Value ($m)

Selection Method

Review Type of Proposal

Advertisement Date (quarter,

year)

Comments

NONE

66 Annex 3

E. List of Awarded and Completed Contracts The following table lists the awarded and completed contracts for goods, works, non-consulting and consulting services.

Goods, Works and Non-consulting Services Package Number

General Description

Contract Value Date of ADB Approval of

Contract Award

Date of Completion

Comments

NONE

Consulting Services Package Number

General Description

Contract Value Date of ADB Approval of

Contract Award

Date of Completion

Comments

NONE F. Non-ADB Financing The following table lists goods, works, non-consulting and consulting services contracts over the life of the project, financed by non-ADB sources.

Goods, Works, and Non-consulting Services General

Description Estimated value (cumulative $m)

Estimated Number of Contracts

Procurement Method

Comments

NONE

Goods, Works, and Consulting Services General

Description Estimated value (cumulative $m)

Estimated Number of Contracts

Procurement Method

Comments

NONE

Annex 4 67

STRATEGIC PROCUREMENT PLANNING

Section 1 – PROJECT CONCEPT

Project Title Rural Roads and Access Project Country Myanmar Executing Agency Ministry of Construction Implementing Agency Department of Rural Road Development Project Development Objectives Improved accessibility of rural people by way

of launching a nation-wide Rural Roads and Access Program

Project Description The project will improve about 152 kms. of rural roads in two pilot regions, Ayeyarwaddy and Magway

List of Intended Packages Three civil works packages in 7 lots and one consultancy contract

Summary of Financing Agreement Concessional OCR Loan: $37.5m Special Fund Resources: $5.8m

Section 2 – OPERATING ENVIRONMENT

A. Capacity and Capability Assessment

STRENGTHS WEAKNESSES Government has endorsed a strategy to

provide a procurement law Some ministries have developed

appropriate bidding documents Budget cycle incorporates procurement

planning and costing in most instances Most ministries and departments have

procurement committees Internal audit functions are available in

most ministries Anti-corruption law promulgated Arbitration law enacted MOC has experience with ADB, World

bank and KfW financed projects

No procurement law yet Ministries adopt different bidding

documents, ie., lack of standard bidding documents

Lack of information and data No procurement oversight body Inadequate procurement capacity No procurement complaint system No e-procurement Procurement audit is limited Response to audit findings are delayed

OPPORTUNITIES THREATS Opportunities are immense Procurement law, procurement manual

and standard bidding documents will facilitate improved procurement

E-procurement system to be established Appoint procurement oversight body Implement focussed procurement training

program

Business as usual Procurement capacity continues to be low Inadequate contract management Inadequate staffing of PMUs Construction delays Low response from established bidders Procurement approval delays Payment delays

68 Annex 4

Since DRRD is a new department, it is opportune time to establish proper procurement systems and improve staff capacity

B. Support Requirements

Procurement Capability & Capacity The procurement unit of the PMU is inadequately staffed. Capacity is low. One procurement consultant will be required to support the selection of the Detailed Design and Project Implementation Support Consulting firm as advance procurement

Experience in Implementing Similar Projects MOC is currently implementing similar projects financed by the World Bank, KfW and ADB.

Contract Management Experience & capability MOC is currently managing the WB, KfW and ADB financed projects with significant support from the Project Implementation Consultants

Level of Reliance on External Consultants Extensive consultant support is required

Existence and Description of Complaints Management System

ADB’s SBD for Small Contracts-Works will be used. The SBD provides for a procurement complaints mechanism.

C. Key Procurement Conclusions

The legal framework is not established. Standard procedures, procurement manuals and procurement rules/ regulations are not clear and not comprehensive. Open competitive bidding is the default procedure. The main weakness is the limited procurement management capacity. Lack of experience in international bidding and consultant selection is also a concern. The procurement units will be provided procurement briefing, training and will also be supported by procurement consultants.

D. External Influence Analysis

Governance The legislative process is not established. The Law on Public Procurement is under drafting. Associated standard procedures, standard operating procedures, procurement and financial management manuals that will provide clear guidelines on procurement approval procedures reporting, auditing and contract management needs to be developed.

Economic Myanmar is undergoing a fundamental transformation since the election of a democratically elected government in 2011. The Government has initiated wide range of economic, social and governance reforms which has stimulated economic growth with improved social indicators and rule of law. The GDP growth rate is at a healthy 7-8% level.

Sustainability Myanmar is at high risk of natural disasters, such as typhoons and floods which severely damage villages and roads especially unpaved rural roads. This project will support the Government’s National Strategy for Rural Roads and Access which envisages connectivity of at least 80 % of the registered villages with all-weather roads.

Annex 4 69

Technology Technological advances are slow. Internet access is low. Telecommunication facility is available and growing. Electronic procurement is not in place. This project will adopt simple and time-tested technology. All material required are available locally.

E. Key Procurement Conclusions

Myanmar’s national Strategy for Rural Roads and Access aims to connect 80% of the registered villages with all-weather roads by 2030. The policy is broad and ambitious. This is the first pilot project towards attaining this goal with the planned development of 152 kilometers of all-weather roads in two poor regions.

F. Stakeholder Analysis and Communication Plan

Non-government organizations Civil society

Min. of Planning and Finance Min. of Construction Dept. of Rural Road Development State Governments Asian Development Bank

Media organizations

Pow

er a

nd In

fluen

ce o

ver t

he P

roje

ct

Interest in the Project

High

High Low

Rural people Construction industry Development partners

70 Annex 4

G. Stakeholder Communication Plan

Stakeholder Name and Role Ministry of Planning and Finance (MOPF) Interest in the Project Borrower’s Representative Support and Influence Level Project sponsor with significant influence in

decision making Objections, Drivers, Needs, and Levers MOPF requires well designed and economically

viable project, timely procurement and implementation

Action The project is supported by MOPF as the Borrower’s representative and loan negotiator. Will review project implementation progress regularly.

Responsible, Accountable, Consulted, or Informed

Substantially responsible

Communicate What, When, and How All decisions in hard copy, email, reports and formal meetings

Stakeholder Name and Role Ministry of Construction (MOC), Department of

Rural Road Development (DRRD) Interest in the Project Executing Agency/ Implementing Agency Support and Influence Level Project Champions, decision makers Objections, Drivers, Needs, and Levers Support the project and will strive to complete the

project to meet the designed and desired outcomes

Action The IA is fully involved in the design and implementation of the project

Responsible, Accountable, Consulted, or Informed

Fully responsible

Communicate What, When, and How All decisions, and implementation status on regular basis through formal meetings and emails.

Stakeholder Name and Role Asian Development Bank (ADB) Interest in the Project Financing Agency Support and Influence Level Supporter with significant influence Objections, Drivers, Needs, and Levers Requires advanced level of project preparedness,

establishment of the PMUs, efficient procurement processing and project implementation

Action Concerned about the capacity to implement the project

Responsible, Accountable, Consulted, or Informed

Responsible and accountable and to be consulted at all stages of implementation

Communicate What, When, and How Reporting at regular intervals

Stakeholder Name and Role Rural population Interest in the Project Beneficiaries Support and Influence Level Project supporter Objections, Drivers, Needs, and Levers Need these additional all-weather for ease of

communication and protection from floods and emergency situations.

Action Actively support the project. Responsible, Accountable, Consulted, or Informed

Responsible

Annex 4 71

Communicate What, When, and How Should be consulted right from the project preparation stage, identify road facilities required through face to face meetings on a regular basis

Stakeholder Name and Role Construction Industry Interest in the Project Beneficiary Support and Influence Level Fully support the project and should be consulted

to disseminate business opportunities, present and future.

Objections, Drivers, Needs, and Levers Transparent and efficient procurement. Action Fully support the project as they will benefit from

the availability of skilled personnel Responsible, Accountable, Consulted, or Informed

Must be regularly consulted

Communicate What, When, and How Business seminars, newspaper advertisements, and notification on websites.

H. Key Procurement Conclusions

Due to the geographical stretch of the 14 roads under the project, packaging will have to appropriate to attract international and national bidders. Supervision and contract management will be critical along with enhanced contractor capability. Wide publication of business opportunities, procurement plans and contract award details on appropriate websites, newspapers and bulletins to industry associations is essential.

Section 3 – MARKET ANALYSIS

A. Porter’s 5 Forces

Competitive Rivalry The project is relatively simple in design. Substantial competition is expected for the civil works contracts.

Bargaining Power of Buyers Bargaining power of the borrower is high as it has a dominant position in this market.

Bargaining Power of Supplier’s Supplier’s bargaining power is limited as large competition is likely.

Risk of New Entrants Interest of new entrants is welcome to bring in more competition and technology.

Risk of Substitutes The structures identified under the project are standard and no major technical innovativeness is required.

B. Key Procurement Conclusions

The project is simple involving 14 relatively small rural roads to be built with standard technology. No major complex market analysis is required. The civil works contracts can be substantially implemented by national contractors. There are sufficient number of consultants operating in the country and the region who can meet the project needs. The three civil works packages need to be suitably divided into lots based on proximity to each other and to attract international as well as local contractors. Local bidders may form joint ventures with other local firms or international firms, as appropriate.

72 Annex 4

C. Supply Positioning

D. Key Procurement Conclusions Construction of the roads is quite simple. The scope of the project is divided into 3 regions. In case, single contracts are awarded and project implementation difficulties such as non-availability of site, contract award delays, construction delays and payment delays may adversely affect the entire region. Therefore, the core issue will be to consider dividing the three packages into appropriate lots, say 7 lots. This will support effective and efficient implementation.

Strategic Security · Simple design · Timely site handing

over

Strategic Critical · Appropriate packaging

in lots on regional basis

Tactical Acquisition · No low value items are

required · Vehicles · Office Establishment

Tactical Advantage · Simple road

rehabilitation and construction

Ris

k

Spending

Low High

High

Annex 4 73

E. Supplier Preferencing

F. Key Procurement Conclusions The project is simple and no major issues are expected. The EA/IAs should ensure adequate transparency in the bidding process. Site availability and constructions drawings should be provided in a timely manner. Measurements and payments should be timely. Direct payment procedure by ADB may be adopted.

Section 4 – RISK MANAGEMENT

A. Project Procurement Risk Register

Risk Description Likelihood Impact Risk Score Proposed Mitigation

Risk Owner

Supply market is competitive for civil works but response may be low due the nature of the project

4 5 20 Advertise bid invitations in easily accessible media.

EA/IA

There is procurement law or e-procurement system

1

5 5 Advertise bid invitations in easily accessible media.

EA/IA

Inefficient procurement planning

4 3 12 Support from TRTA Consultants

EA/IA/ADB

Lack of procurement capacity and expertise

5 5 25 Provide targeted training to procurement staff and

ADB

Develop

· Civil contractors will implement in time with required quality

Core · The project is simple and

profitable · No security concerns · Transparent procurement · Stable government

Nuisance · Client delays site handing

over, approval of drawings, variations and payments

Harvest · Contractors will get high profit

margins · Good competition · Source construction material

locally · Payment process is efficient · Minimum bureaucracy

Attra

ctiv

enes

s

High

Low High Percentage of Revenue

74 Annex 4

Risk Description Likelihood Impact Risk Score Proposed Mitigation

Risk Owner

assign procurement consultants to the Procurement Units

Inadequate transparency in procurement

2 2 4 Advertise procurement plans and procurement notices on easily accessible media

IA/ADB

Quality of cost estimates 2 3 6 Prepare correct scope of work and cost estimates

EA/IA

Inadequate complaints handling mechanism

2 5 10 Set up Procurements Complaints Review Committee within MOC

MOC

Inadequate formal internal control and audit mechanism

1 1 2 Internal control and audit activities to be maintained.

MOC/DRRD and Audit Department

In adequate ethics measures and anticorruption measures

1 1 1 Provide adequate measures in bidding documents

EA/IA

Evaluation takes too long 5 5 25 Support from DDPIS Consultants, Capacity Building

EA/IA

Inadequate contract management capacity

5 5 25 Provide capacity building training and support from PIC consultants

EA/IA/ADB/DDPIS Consultants

Abnormally low bids 4 3 12 Use processes indicated in bidding documents

BEC/PU

Variation in scope or costs after contract award

4 3 12 Prepare correct scope of work and cost estimates

Consultants/ PCUs

Contractor mobilization delays

3 5 15 Ensure timely contract award and site handing over

IA/Contractors

Section-5 – OPTIONS ANALYSIS

Strategic Options

Description Feasibility

(1-10) Suitability

(1-10) Acceptability

(1-10) Overall (3-30)

Advance contracting is recommended for the selection of the Detailed Design and Implementation Supervion (DDIS) Consultants following QCBS (90-10). The request for expressions of interest should be issued in June 2019 and the consultants fielded by April 2020.

10 10 10 30

Procurement activities should be done in two phases. In the first phase the invitation for bids for the CW1 and CW2

10 10 10 30

Annex 4 75

Strategic Options Description

Feasibility (1-10)

Suitability (1-10)

Acceptability (1-10)

Overall (3-30)

packages should be advertised in the third quarter of 2020 and for the CW3 package in the third quarter in third quarter of 2021. The three packages should be divided into seven lots based on geographic location of the project roads. This will ensure efficient project implementation. All packages shall be open competitive bidding procedure with international advertising. ADB’s SBD for Small Contracts-Works shall be used

Section 6 – Procurement Strategy Summary

A. Procurement Packaging and Scheduling

The project includes three civil works packages divided into 7 lots based on geographical coverage. Advance contracting must be adopted for the selection of the Detailed Design and Implementation Supervision (DDIS) Consultants. The request for expressions of interest should be issued in June 2019 so that DDIS consultant selection is completed by June 2020. CW1 and CW2 packages should be advertised in Q1 of 2021 and that of the CW3 package in Q1 of 2022. B. Procurement Method All civil works packages may be procured following International OCB. The DDPIS consulting contracts should be processed following QCBS (90-10). C. Prequalification Prequalification is not recommended as all contracts are relatively simple. D. Bidding Procedures All packages are simple in design, hence Single-Stage: One-Envelope bidding procedure shall be adopted for procurement of works and equipment. E. Specifications All-weather roads shall be designed to withstand flooding and routine wear and tear.

76 Annex 4

F. Review Requirements All contracts shall be subject to prior review. G. Standstill Period Standstill period shall not apply. H. Standard Bidding Documents and Contract Forms ADB’s SBD for Small Works shall be used for the procurement of the civil works packages. I. Pricing and Costing Method The civil works will be based on admeasurement. J. Key Performance Indicators As part of the contract management strategy, the IAs will identify key performance indicators (KPIs) for each contract to monitor the contractor’s performance during contract implementation. Some of the KPIs for the projects rather simple civil works contracts are suggested below:

i. Submission of work program within 28 days from issue of notice to commence ii. Mobilize required equipment and personnel iii. Takeover of site and prepare building layout iv. Establish facilities like testing laboratory, safety and health measures v. Submit contract management plan vi. Comply with legal regulations including necessary insurance policies vii. Construction achievement in phases

K. Evaluation Method All procurement packages will be evaluated based on the lowest evaluated price and contracts will be awarded to the lowest evaluated substantially responsive bidder. L. Contract Management Approach Contract management will be on collaborative basis. Contract management plans shall be prepared for each contract. This should include risks and risk management plan, identifying resources, communication management, contract administration procedures, quality management, managing payments, records management, managing changes, claims and disputes and finally contract closure procedures and requirements. EA/IAs will seek ADB’s approval of the contract management plan and provide timely reports to ADB.

Annex 5 77

TERMS OF REFERENCE

I. THE PROJECT 1. The Government has requested the Asian Development Bank (ADB) to help finance Myanmar’s national rural road and access program, which aims to connect 80% of registered villages by all-weather roads by 2030. ADB plans to support the government’s program through a series of investment projects, and as the first proposed project, it will improve rural road access in two poor regions in Myanmar, Ayeyarwady and Magway by (i) improving about 152 kilometers (km) of rural roads to paved standard; (ii) improving the rural roads’ maintenance management regime and respond to disaster risk affecting the rural road network, and (iii) improving rural road safety. The project extends efforts of the ADB to systematically upgrade the much-needed country’s Core Rural Roads Network (CRRN) to increase rural access and inclusive economic growth in Myanmar, by preparing the future project during its implementation. 2. Further details of these outputs can be found in the report for the project’s feasibility study, the preliminary design drawings, and the draft Report and Recommendations to the President (RRP), which will be made available to short-listed consultants.

3. Project Costs and Financing. The project’s estimated cost is $52.41 million, which will be financed by a $45.40 million loan and $5.8 million grant from ADB, and $1.21 million government counterpart funding.

4. Implementation Arrangements. The project will be implemented over a 6-year period, from 2020 to 2025, which comprises one year of detailed design and procurement, three years of civil works including one year of defect liability period, and nine months to a year of monitoring period before the scheduled loan closing date. As stated in para 2 above, proposed project’s EA will be the MOC acting through its DRRD. In 2019 DRRD will establish a PMU to oversee the project’s implementation. The works will be undertaken by contractors selected following the international procurement provisions of procurement regulations for ADB Borrowers. II. BACKGROUND

5. DRRD intends to engage a consultant (the Detailed Design and Implementation Supervision [DDIS] Consultant) to assist it with implementing the Project. These Terms of Reference set out the objectives, scope, required resources, schedule and other details of the proposed consulting services. DRRD will engage the consultant, as a firm, in accordance with Procurement regulations for ADB Borrowers. The consultant’s contract will be time-based15.

III. SCOPE OF THE CONSULTING SERVICES

6. The Consultant will provide services during implementation of the project. The consultants shall perform their duties in accordance with accepted professional standards, utilizing sound international engineering, management and economic practices. There will be one contract with two major activities for the consultancy services as below. A. Activity 1 - Implementation and Supervision

a. Detailed engineering design for the project and procurement support

15 There will be a few cost items for provisional sum, but the contract is mainly time-based.

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b. Construction management and supervision including implementation of resettlement and ethnic group plan, social safeguards, and environmental safeguards

c. Rural road maintenance management support including disaster management and emergency maintenance

d. Road safety program implementation

B. Activity 2 – Preparation of future project phases and Institutional Support a. Rural Road Planning and Program Development

7. Activity 1.a. Detailed engineering design for the project and procurement support. The consultants have to carry out all required filed surveys and investigations and prepare detailed engineering designs including construction drawings and detailed technical specifications, bill of quantities both with cross references, for all civil works contracts under the scope of this project. The estimated costs for the civil works contracts indicated in the procurement plans have to be reviewed and updated considering the market rates for the PMU to review and approve. Findings of the initial safeguards' assessments (environment and social) during the survey and preliminary engineering stage have to be incorporated in the detailed engineering designs and the bidding documents including contract conditions. The consultant will prepare the complete set of bidding documents incorporating the comments from PMU and ADB and assist the PMU in procurement and contract award. Civil works procurement assistance shall include the followings:

a. Publication of IFBs, conducting pre-bid meetings and replying to requests for clarifications;

b. Bids openings and preparation and communication of bid opening records; c. Bid evaluation and drafting bid evaluation reports; and d. Assisting DRRD with finalizing award of the contracts, including issuing letters of

acceptance, receiving and reviewing guarantees, and preparing and signing contracts with the selected contractors and preparing contract management plans.

8. Preparation for Phase 2. The project is for piloting the rural roads network program of Myanmar. Phase 2 is expected to be prepared during implementation of this project, and the consultant is required to prepare master bidding document including detailed engineering design, bill of quantities and specifications, and support DRRD in procurement as part of Activity 1.a. 1.1. Safeguards documents for Phase 2 will be prepared as part of Activity 1.b. 1.2 below. 9. Activity 1.b. Construction management and supervision including implementation of resettlement and ethnic group plan , social safeguards, and environmental safeguards. The consultant will be the Employer’s representative in the form of ‘Project Manager’ for the contracts, as defined in the General Conditions of Contracts. However, in case the contracts will be executed by Myanmar national contractors, the consultant will also be required to assist the national contractors with improving their contract management and technical skills, so that in future they can more effectively undertake these and larger road construction projects. Experience with developing the skills of national contractors for infrastructure works will be a factor in the consultant selection process.

10. The scope of the activities will include the followings:

(i) administering the civil works contracts as the ‘Project Manager’ in case of ADB small

works contract forms and/or as ‘Engineer’ in case of FIDIC contract forms, and undertaking the duties as defined in the contract documents;

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(ii) ensuring that the contractors’ topographical surveys and cross sections to be used for final design, working drawings, as-built drawings and measurement purposes comply with the requirements of the specifications;

(iii) checking and approving the contractors’ method statements, working drawings, and programs for both temporary and permanent works;

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

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

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

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

(viii) Monitoring the compliance with contract management plan and updating the contract management plan as and when necessary and preparing the compliance reports.

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

(x) together with the PMU, the contractors, and public utility agencies, identify all utility services (electricity, telecommunication, gas, and water) within the project’s corridor of impact that are to be protected and marked to avoid damage, or relocated, as required by the works; in this regard, special attention is drawn to identifying and marking the exact location of buried gas pipelines and fibre optic cables within the right-of-way, not only within the corridor of impact, and ensuring proper arrangements are made to ensure their protection and uninterrupted service during construction of the works, and during any required relocation or adjustment of the facilities;

(xi) commenting on and ultimately approving the contractors’ Environmental Management Plans (CEMPs) and Summary Social Action Plan, and, thereafter, monitoring and reporting compliance with these plans;

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

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

(xiv) conducting monthly Contract Site Meetings, to be attended by representatives of the Employer and the contractors; attending and making presentations at progress coordination meetings and preparing the minutes of Meetings and similar progress reviews, obtain approval from PMU before finalization of the draft minutes;

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

(xvi) preparing Final Payment Certificates, Taking Over Certificates, and Performance Certificates, to the timing of, and as required by, the contracts, and advising the Employer on the release of all contractors’ securities and retention payments.

(xvii) Updating, implementing and monitoring of the safeguards documents for phase-1 and preparation of safeguards documents for phase-2

10. Environmental supervision and compliance monitoring. The Consultant will ensure the implementation of the Project’s Environmental Management Plans (EMP), which are part of the two Initial Environmental Examination (IEE) reports for Ayeyarwady and Magway, respectively. The Consultant will also prepare IEE reports including EMPs for Phase 2, as required, in compliance with ADB SPS 2009 and the Myanmar EIA Procedure 2015.16 The specific tasks will include the following:

a. Prior to commencement of works:

(i) update the IEE reports for Ayeyarwady and Magway, including their EMP, as needed,

to reflect final project design and ensure compliance with ADB SPS 2009 and the MYA EIA Procedure 2015;

(ii) assist DRRD in preparing tender documents and ensure that the updated EMP are included in the tender documents and civil works contracts;

(iii) ensure that only licensed commercial aggregate quarries are used for the project. It should be noted that there is hardly any commercial aggregate quarry in Myanmar which possess government’s approvals, which also satisfy the requirements of ADB SPS 2009. Therefore, Consultant needs to mention this requirement in the draft bidding documents, and during pre-bid meetings with potential contractors. Since obtaining government approvals for potential aggregate quarries that contractors may propose takes time, Consultant should propose required steps to minimize the time taken for approval procedures in the draft CEMPs.

(iv) organize a technical transfer program for MOC/DRRD staff on how the environmental aspects of the project will be monitored, giving emphasis on CEMP evaluation; compliance monitoring of construction activities and preparation of corresponding reports; supervision responsibilities and interaction with contractors; and documentation, resolution and reporting of non-compliance issues and complaints;

(v) design an ambient environmental monitoring program for air quality, water quality, and noise, subcontract it under provisional sum, and ensure that the baseline monitoring report is finalized prior to commencement of construction on any subproject;

(vi) provide guidance and assistance to the PMU’s environment specialist on the environmental aspects of the project with emphasis on compliance monitoring and reporting;

(vii) assist the PMU with establishing and operating the grievance redress mechanism (GRM);

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

(ix) prior to review by the Environmental Conservation Department (ECD) of the Ministry of Natural Resources and Environmental Conservation (MONREC) and ADB, review

16 Phase 2 Actvities will not be implemented under this project, but may be prepared under this project.

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the CEMPs and recommend modifications to the CEMPs to be compliant with: (a) the environmental requirements of the construction contracts as reflected in the environmental management plans (EMPs); (b) the conditions of environmental approvals of the MONREC and the Environmental Compliance Certificate; and (c) ADB's SPS, 2009;

(x) develop the compliance monitoring system to be used during the construction period for monitoring the contractors' performance relative for environmental requirements, including the preparation of: (a) monitoring and corrective action forms and checklists; (b) inspection procedures; and (c) documentation procedures;

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

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

(xiii) Coordinate preparation of safeguards documents for Phase 2 subprojects. This shall include, but not necessarily be limited to: (a) screening of the proposed subprojects using ADB REA checklist and following MYA EIA Procedure 2015; (b) submit categorization request to ADB and MYA ECD; (b) prepare IEE reports including EMP for each region covered in Phase 2 in compliance with ADB SPS and MYA EIA Procedure 2015 requirements and instructions of ADB and ECD; (d) ensure meaningful consultation is conducted during IEE preparation; (e) secure clearance of IEE report(s) by ADB and MYA ECD. b. During implementation of construction works:

(i) assess community safety during constructions, confirming that appropriate signs,

lighting, markings, safe zones, and barriers for deep excavations and road edges are provided;

(ii) record non-conformance cases, promptly inform contractors of improvements needed, respond to contractors’ proposals, prepare corrective action plans for Contractors, and monitor implementation;

(iii) assist the DRRD, PMU in resolution and documentation of environmental complaints; (iv) include environmental monitoring in monthly monitoring reports for submission to the

PMU; and (v) draft semi-annual environmental safeguard monitoring reports, as required by ECD

and ADB;

c. Upon completion of construction: (i) prepare a report on the project's environmental compliance performance, including

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

11. The Consultant’s International Environment Specialist (IES) will undertake the initial monthly monitoring, working with the National Environmental Specialist (NES). Subsequent monthly monitoring will be carried out by the NES, with support of the Resident Engineer and

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Resident Inspectors. The IES will undertake semi-annual monitoring and report preparation working with the NES. The required semi-annual report environmental report will be based on the results of monthly monitoring. The IES, with assistance from the NES, will design and conduct an environmental management capacity building program for MOC and DRRD staff. 12. Resettlement and ethnic group plan implementation and management. The consultant will ensure the updating, implementation and monitoring of the Resettlement and Ethnic Group Plan prepared for the phase-1. Additionally, the consultant will also prepare Resettlement and Ethnic Group Plan for the for the phase-2 intervention as required in close consultations with the technical and design team and in accordance with ADB SPS, 2009 and the rules and regulations of Myanmar. 13. Setting up of relevant institutions for the land acquisition and resettlement activities will be the major task during the detailed design and especially prior to implementation of the resettlement and ethnic group plan (REGP). The consultant will be responsible for updating the draft REGP as per the detailed design in close coordination with the technical team. The update will include final impact assessment, detailed measurement surveys, preparation of individual specific matrix for each affected household with its entitlement and updating of compensation rates etc. through the replacement cost survey. The updated REGP will be sent to ADB for approval and upon the approval, the REGP will be disclosed. Upon the approval of updated/final REGP, all the arrangements for fixing the compensation and the disbursement needs to be done which includes issuance of Identity cards (IDs), payment of all eligible compensation and assistance, initiation of rehabilitation measures, site preparation for delivering the site to contractors for construction and finally commencement of the civil work. Detailed tasks involved as below:

· Work closely with the PMU of DRRD and the technical team to update and finalize the REGP based on the detailed design

· Updating the project resettlement and ethnic group plan s in accordance with Government and ADB’s SPS, 2009 prior to commencement of construction in any section of a road, including: (a) guiding and supporting the planning and implementation of the detailed measurement surveys; (b) updating the socio-economic surveys, if required; (c) guiding and supporting the updated replacement cost surveys to ensure that compensation rates are based on replacement cost at time of compensation; (d) supporting the preparation of detailed relocation and income restoration strategies, in consultation with affected households, civil society and relevant Government agencies; (e) ensuring meaningful consultation and participation of affected households, civil society stakeholders, community-based organizations, and relevant government agencies in the planning and implementation of the resettlement and ethnic group plan s; (f) supporting the PMU and relevant Government agencies to ensure appropriate disclosure of the resettlement and ethnic group plan s; and (g) preparing and supporting the PMU in the finalization of the updated resettlement and ethnic group plan s to the stage where they are endorsed by the Government and receive ADB concurrence.

· Based on the detailed/final design by the engineering team and as approved by the PMU/DRRD/MOC, the consultant will assess final impacts related to land and involuntary resettlement and will finalize and update the REGP.

· preparing updates and supplementary resettlement and ethnic group plan s in accordance with Government and ADB’s SPS, 2009 to cover any changes in the scope of works covered by the resettlement and ethnic group plan s

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· Assist PMU in updating the compensation cost and preparation of individual specific compensation matrix highlighting the impacts, ownership details, eligibility, entitlement related to compensation and assistance etc.

· Take proactive action to anticipate the social safeguard requirements of the project to avoid delays in implementation.

· Establish dialogue with the affected communities and ensure that their concerns and suggestions are incorporated in the project and keeping the records of grievances.

· Together with PMU, conduct public consultation, disclosure of REGP · Setting up of GRM and GRC · Together with PMU, implement the final REGP which shall include, but not limited to,

disbursement of compensation and assistance and preparation of monitoring report to be submitted to PMU and obtain no objection for commencement of construction.

· Monitoring the implementation of REGP to ensure that the notice to proceed to contractors for any given section cannot proceed until the PMU confirms in writing that payment has been fully disbursed to the displaced and/or affected people, and rehabilitation measures are in place, already compensated or assisted displaced people have cleared the area, and the area is free of any encumbrances

· Recommending corrective actions on non-compliance issues, and reporting on their implementation

· Assist PMU to prepare and submit the semi-annual report to ADB on the status of implementation of REGP

· supporting the PMU and relevant Government agencies to establish an effective GRM. · Provide on the job training on social safeguards and especially the requirement of ADB

SPS, 2009 to the PMU staff involved in the project implementation for strengthening their capacity in managing, implementing, planning and monitoring social safeguards.

· Phase-2 responsibilities. Coordinate preparation of social safeguards documents for Phase 2 subprojects. This shall include, but not necessarily be limited to: (a) screening of the proposed subprojects using ADB checklist on Involuntary Resettlement and Indigenous Peoples (b) submit categorization request to ADB (c) prepare Resettlement and ethnic group plan or Combined Resettlement cum Ethnic Minority Plan for subprojects covered in Phase 2 in compliance with ADB SPS and rules and regulations of Myanmar

· Social Management. The consultant social management tasks will cover but not limited to the following:

(i) Communications and Participation Planning and Implementation (ii) HIV/AIDs and Human Trafficking Awareness Program (iii) Community based road safety program and road safety engineering inspection (iv) Gender Action Plan Preparation and Implementation

14. Project Communications Plan. The Consultant will develop and implement a Project Communications Plan. The plan will include:

(i) Project Website. The Consultant will develop a project website in English and Myanmar language and help the PMU set it up and maintain it, either as part of MOC’s website, or as a stand-alone website. The website is to include information about the project, disclosure requirements, links to key public documents, as well as information regarding the bidding process, bidders, contract awards, use of funds disbursed under

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the project, and physical progress. The project will follow ADB’s Public Communication Policy and its guidelines on the disclosure and exchange of information.

(ii) Public Relations. The Consultant will prepare a project information leaflet in English and Myanmar language, record positive and/or negative local media coverage about the project, and draft press releases on project progress.

(iii) Stakeholder Relations. The Consultant will assist the PMU hold stakeholder outreach meetings in the project area to update local communities with project progress. Specific communications materials will be provided to community members in Myanmar language or other appropriate local language, describing the project, relevant governing ADB policies and procedures, benefit entitlements (for affected people), grievance redress mechanism, HIV/AIDS, safe working conditions, etc. A basic tracking system will be maintained to record consultation activities, the provision of project information, to register concerns and/or complaints received, and to track follow-up action.

(iv) Information to road users. The Consultant will ensure that clear and updated information is provided periodically to road users about current and future disruptions of traffic caused by works.

15. HIV/AIDs and Human Trafficking Awareness Program. The Consultant will design a gender-sensitive HIV/Aids and Human Trafficking Awareness program. The Consultant will subcontract the implementation of the campaigns to a local consultant or non-governmental organization and assist it with developing the capacity to undertake this task. The Consultant will facilitate and monitor implementation. A draft program is in Supplementary Appendix. 16. Gender Action Plan. The consultant will assist the PMU in implementing the Gender Action Plan and will ensure that the targets are achieved. 17. Project evaluation support upon completion is required as below.

(i) Benefit monitoring and evaluation. The Consultant will establish a benefit

monitoring and evaluation system based on the project’s Design and Monitoring Framework indicators, plus other useful indicators, in consultation with PMU and ADB missions. Baseline data for all such agreed indicators should be complied and reported in a report. This activity should be completed before any civil work starts. Again, close to project completion, when all civil works have been completed. This report also forms a basis for the draft project completion report.

(ii) Project Completion Report. The Consultant will also prepare a project completion report in accordance with ADB’s format and content for such reports. This will require, among others, (a) conducting a baseline survey prior to construction commencing and final survey of the project roads, to include an assessment of classified traffic volumes, average speeds, number and severity of crashes, International Roughness Index (to be undertaken by each Contractor), and pavement condition; (b) conducting a baseline and final survey of freight transport and public transport costs on the project roads; and (c) carrying out economic and financial analyses of each project road as applicable.

18. Periodic reporting to ADB, including project completion report. The Consultant will assist the PMU in drafting the project’s progress reports, and semi-annual safeguards monitoring reports.

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19. Activity 1.c. Rural road maintenance management support including disaster management. The consultant will develop a rural road maintenance management program and facilitate capacity building activities for DRRD in implementing this program. The program is meant to have three categories: (i) routine and periodic; (ii) emergency maintenance; and (iii) emergency management. The consultant will establish mechanisms and develop the capacity of the DRRD in managing emergency maintenance works including establishing the emergency procurement systems. The consultant will assist DRRD in producing simple inventories of the rural road network with respect to routine and periodic maintenance and assist DRRD in developing a pilot emergency management plan. The consultant will also develop mechanism to assess the disaster vulnerability of the rural road network in the flood-prone Ayeyarwady region and to integrate the disaster damage inventory into CRRN database including flood hazard maps and climate change impacts. The consultant will also develop a pilot emergency management plan for DRRD in the Ayeyarwady Region. 20. Activity 1.d. Road Safety Program Support. This activity focuses on social enforcement, which would support enforcement activities along the project roads with traffic police, to target offenses attributable to speeding, drink-and-drive, and neglect to wear helmets which cover a large majority of violations with respect to crash incidence. It is proposed that project’s consulting services provide the local police with training on simple but effective enforcement methods coordinated with community and school education provided under this activity. Nevertheless, in the absence of sufficient police personnel in communities, it is proposed to introduce a social education practices to communities. This approach does not aim at any type of punishment at all to violators but focuses on having the violators understand the impact of risky road user behaviors on their own safety. The management of livestock in efficient road use is also a part of this activity here. 21. Road safety education for DDIS Consultant and contractors’ personnel. Since these personnel needs continuous education for proper driver behavior, as well as management of road safety during construction. All personnel need to undergo this training during multiple occasions during the proposed road safety program. It is also necessary that contractors’ health and safety officer and crash prevention officer are well familiar with the road safety measures that need to be sustained after the program has been completed. 22. Activity 2.a. Rural Road Planning and Program Development. The project will complete the identification of the CRRN across the country, renumber and classify it, establish a database and commence an inventory, which will record basic road features, as well as maintenance and emergency repair needs. The project will assist DRRD in preparing multiannual investment programs and work plans. Finally, the project will develop an operational manual and technical guidelines for the program, and train DRRD staff in its use. Disaster resilience considerations will be integrated throughout the program, i.e. in the identification of the CRRN, the prioritization of roads, technical standards and design practices.

IV. PERSONNEL 23. The indicative personnel requirements for the Consulting Services are presented in Table 1 and 2 below for activities 1 and 2. Qualifications and Terms of Reference for each of the key staff are provided in Appendix A.

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Table 1: International Personnel

Table 2: National Personnel

23. Curriculum vitae (CV) must be provided with consultants’ proposals for all key positions. Proposal evaluation will be based on all international positions (Table 1), and for national positions (Tables 2) identified above. Administrative and clerical support personnel are to be provided as required, and the cost of these is to be clearly included in the consultants’ cost proposals. 24. The civil works contracts will include provision for the Consultant’s offices, residential accommodation for PMU staff, vehicles with drivers for the Consultant and PMU staff, motorcycles for inspection teams, office equipment, laboratories with equipment and other support services. In addition to that, one Head Office in NYT (within DRRD building) is considered during implementation.

International Person MonthsTeam Leader (pavement engineer) 50Structural engineer 6Hydrologist 3Geotech Engineer 4Resident engineer 48Environment specialist 6Gender and Social Development Specialist 6Resettlement Specialist 6Procurement Specialist 4Transport Economist 2Material Engineer 10Quantity Surveyor 30Rural road Maintenance specialist 4

Total 179

National Person MonthsDeputy team leader (pavement engineer) 52Design engineer 6Structural engineer 6Material engineer 6Inspectors 100Environment and OHS Specialist 24Gender and Social Development Specialist 12Resettlement specialist 12Road Safety Specialist 12Quantity Surveyor 36Procurement Specialist 6

Total 272

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V. REPORTING REQUIREMENTS 23. Tables 3-1 and 3-2 show the reporting requirements. All reports will be submitted in English in hard copy to DRRD and ADB (5 copies and 2 copies respectively) and in electronic form as PDF files through an appropriate large file transfer application. DRRD/PMU and ADB mission will agree on suitable formats for the progress reports prior to the submission of the first such report.

Table 3-1: Reports for Activity 1 Report Content Submission date

Activity 1.a. Detailed Engineering Design for the Project and Bid Support Inception Report For this activity, Inception Report to be merged

to the Inception Report of the Activity 1.b. Within 1 months after

commencement of services

Report on Survey and Investigations

All field investigations and surveys Within 3 months after commencement of

services Detailed Engineering Designs Report

Including detailed engineering designs, construction drawings, technical specifications

Within 6 months after commencement of

services Draft and Final Bidding Documents (suitable for bidding)

The comments of ADB on the draft bidding document need to be incorporated into the final

bidding documents

Within 6 months after commencement of

services Draft Resettlement and ethnic group plan Phase 1

- Within 4 months after commencement of

services Final Resettlement and ethnic group plan Phase 1

- Within 6 months after commencement of

services Updated IEE Reports including EMP Phase 1

- Within 4 months after commencement of

services Final Report - Within 6 months after

commencement of services

Final Procurement Report for the Project

- Within 12 months after commencement of

services Phase 2 DD and Procurement Preparation

- Within 6 months from the completion of

Phase 1 procurement Phase 2 IEE Reports and EMPs

One IEE Report for each region covered in Phase 2 in compliance with ADB SPS 2009 and MYA EIA Procedure 2015

Within 6 months from the completion of

Phase 1 procurement Final Resettlement and ethnic group plan Phase 2

One RP for each region covered in Phase 2 in compliance with ADB SPS 2009

Within 6 months from the completion of

Phase 1 procurement Final Procurement Report for Phase 2

Within 2 weeks from the completion of

bidding for Phase 2 Activity 1.b. Construction Management and Supervision including implementation of resettlement and ethnic group plan , social safeguards, and environmental safeguards

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Report Content Submission date Inception Report Report will contain a detailed work program, a

brief description of the updated working methods proposed for carrying out the services in accordance with the Terms of Reference. The report will also identify any major issues and problems likely to be encountered.

4 weeks after commencement of services

Monthly Reports Monthly Report to summarize the progress of the project and of each civil works contract separately, the work accomplished, any problems encountered during the month, environmental and resettlement status, a work plan for the next month, and minutes of site meetings. The report will present progress information (S-curve for overall project, and for each contract) in graphical form, relative to all consultants’ and contractors’ approved contract schedules. S-curves should be based on physical progress. Overall project progress should be weighted average considering all project outputs/activities.

Within 10 days after the end of each month

Quarterly Project Progress Reports

Summarize (i) progress achieved for each subproject and activities, (ii) status of PMU staffing, (iii) environmental, resettlement and social safeguards status, (iv) disbursement and contracting status, (v) status of compliance with loan/grant covenants, (vi) key issues and solutions, and (vii) updated procurement plan, costs to completion, others as appropriate.

Within 1 month after the end of each quarter

Environmental Monitoring Reports

Environmental monitoring report to include status of compliance with the project EMP, records of related activities, status of GRM, issues and solutions, and results of environmental baselines and monitoring.

Within 30 days after the end of each 6-months reporting period (30 January; 30 July)

Social and Resettlement Monitoring Report

Social and resettlement monitoring report to include status of compliance with resettlement and ethnic group plan s, records of social and resettlement activities, GRM, and issues and solutions.

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

Safeguards Completion Reports

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

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

Benefit monitoring and evaluation Reports

Baseline report: after establishing a benefit monitoring and evaluation system based on the project’s Design and Monitoring Framework indicators, plus other useful indicators baseline

Should be completed before any civil works starts.

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Report Content Submission date data for all such agreed indicators should be compiled and reported in the report. benefit monitoring and evaluation report: data compilation should be completed in an exact manner as it was conducted for the baseline report. Same set of data should be compiled, analyzed, and reported in the report for benefit monitoring and evaluation.

Should be conducted close to project completion, when all civil works have been completed.

Draft Project Completion Report

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

Not later than 3 months prior to completion of the subproject contracts.

Final Project Completion Report

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

Not later than 3 months after completion of the last of the subproject contracts.

Activity 1.c. Rural Road Maintenance Management Support Report and Recommendations on Maintenance of Rural Roads

Within 4 months after commencement of services

Routine and periodic maintenance Report

The report will have simple inventories of the rural road network with respect to routine and periodic maintenance.

Within 6 months after commencement of services

Sample Emergency Management Plan

The report will assist DRRD in developing a pilot emergency management plan

Within 6 months after commencement of services

Report on Disaster management of Rural Roads including Emergency procurement

Within 6 months after commencement of services

Activity 1.d. Road Safety Program Implementation Program Design Report Program outline to be implemented together with

civil works start. Within 6 months after commencement of services

Table 3-2: Reports for Activity 2

Report Content Submission date Activity 2.a. Rural Road Planning and Program Development Draft Program Report The report will assess feasibility of Phase 2

and suggest a national level rural road program. For Phase 2 scope, it will define specific subsections from the pre-identified townships in Ayeyarwady and Magway.

Within 3 months after civil works start

Final Program Report The report will assess feasibility of Phase 2 and suggest a national level rural road program. For Phase 2 scope, it will define specific subsections from the pre-identified townships in Ayeyarwady and Magway.

Within 6 months after civil works start

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VI. TENTATIVE LOCATION OF SERVICES

24. It is anticipated that for the duration of the project the locations for the Consultant’s offices will be as follows.

(i) The Consultant will be provided with an office by the PMU for project implementation activities. The location will be within DRRD building.

(ii) The contractors for civil works will provide the consultant with office space as necessary, one from Ayeyarwady, and the other from Magway.

VII. IMPLEMENTATION SCHEDULE

25. The contract will be for 63 months. Commencement of civil works for the first package in Ayeyarwady and Magway are expected to be started within 12 months after commencement. The remaining civil works package in Ayeyarwady region will be started within 12 months from the commencement of the preceding packages. The first Ayeyarwady and Magway packages will be for 36 months, and the other Ayeyarwady civil works contract will be for 32 months including 12 months’ defect liability period, which is required to be supervised and monitored by the Consultant. VIII. EMPLOYER’S SUPPORT, COUNTERPART PERSONNEL AND INFORMATION

A. Services and facilities to be made available to the Consultant by the Employer

26. The following facilities will be provided through the civil works contracts at no cost to the Consultant, except during detailed engineering design:

i. Field offices for the Consultant field teams (the Project Management office in Yangon will be provided by the PMSCS through its contract). The offices will be fully furnished, maintained and serviced, including all office equipment, computers, software and printers, and all consumables;

ii. telecommunications systems by landline at each office, if available in the area, and by mobile phones, excluding the cost of international telephone and fax charges for both landline and mobile calls; internet connection at each office including all recurrent charges and charges made by the internet service provider;

iii. materials testing laboratories. fully equipped, serviced and maintained, including computers, software and printers and all consumables;

iv. all survey, measurement, and setting out equipment necessary for checking the setting out and control of the works;

v. site safety equipment including visibility jackets and helmets; vi. all in-situ testing and sampling equipment; vii. fully licensed and insured vehicles with drivers for the use of the Project Manager,

Resident Engineer and their staff for project activities, including servicing, maintenance, fuel, and oil;

viii. same as vii for PMU staff: Project Director, Deputy Director, resident counterpart staff (each);

ix. fully licensed and insured motorcycles for the use of site supervision staff for project activities, including helmets, protective clothing, servicing, maintenance, fuel, and oil; and

x. security and maintenance services for the offices, laboratories, and their compounds.

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B. Counterpart personnel to be assigned by the Employer to DDIS Consultant 27. DRRD will provide counterpart staff to work with the DDIS Consultant, within the PMU. The counterpart staff are to be given technical transfer by the Consultant to gain hands-on experience in all aspects of project management and contract supervision. It should be noted that the counterpart staff are Employer’s staff and not staff of the Consultant. Any remuneration for counterpart staff will not be included in the DDIS Consultant’s proposal and subsequent contract agreement. However, per diem is included for counterpart staff during field missions, which should be similar to the amount for national Consultant staff. C. Data, Reports, and Information

28. DRRD will provide all relevant existing data, reports, and information available through documents, and other modes to the Consultant during the implementation of the services. DRRD will assist with facilitating access of the Consultant to other government agencies for communications, collecting of relevant information, data, documents, etc. and other activities related to the services.

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QUALIFICATIONS AND TERMS OF REFERENCE FOR DDIS CONSULTANT’S PERSONNEL

International Consultants (refer Terms of Reference Table 1) Team Leader/Road Engineer. Professionally qualified civil engineer or equivalent, preferably with 15 years’ experience in projects similar to the project, including pavement rehabilitation works, design and supervision, and 5 years’ experience as a team leader/project manager. Sound English communication and experience in FIDIC-based contract management is compulsory. Also, this expert needs to demonstrate experience in optimal design of road safety engineering features without depending on expertise of an additional road safety expert. Geographical experience in Myanmar or the region is an advantage. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The team leader will be responsible to MOC as the Employer, for the successful implementation of the project, and for managing the team. The team leader will also provide assistance as required to the PMU for matters related to the project, including providing responses to ADB’s requests, and supporting PMU during ADB review missions. Structural Engineer. Professionally qualified civil engineer or equivalent, preferably with 7 years’ experience in projects similar to the project, including assessment of existing concrete and steel truss bridge and culverts, design of replacement structures, reviewing of contractors’ designs and working drawings, etc. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The Bridge Engineer will be responsible to the Team Leader for all activities related to the project’s structural works, for supporting the Senior Resident Engineer for the structural aspects of the contract supervision task, and for the structural aspects of the project, and others as required. Hydrologist. Professionally qualified Bachelor’s degree or equivalent in environment or related field preferably 7 years’ experience in hydrology and drainage engineering work. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. This expert will be responsible to the Team Leader for preparing the drainage engineering inputs in consideration of hydrological issues of the project. He/she will also be responsible for the same aspects for Phase 2. Geotechnical Engineer. Professionally qualified civil engineer, or equivalent, preferably with 7 years’ experience in climatic and geotechnical conditions similar to Myanmar. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The expert will be responsible to the Team Leader for all investigation, testing, and reporting related to materials to be used on the project, including oversight of contractors’ laboratories, site testing activities, review and approval of concrete and asphalt mix designs, etc, and for the work of the materials team. Resident Engineer. Professionally qualified civil engineers or equivalent, preferably with 10 years’ experience in projects similar to the project, including pavement rehabilitation works, one position with concrete pavement experience, and supervision of contracts under FIDIC-based contract conditions. Each expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The experts will be responsible to the Team Leader for the successful implementation of the contracts to which they have been assigned, and for managing the consultant’s team members assigned to these contracts.

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Environment Specialist. Professionally qualified Master’s degree or equivalent in environmental engineering or related field with at least 7 years’ experience in environmental management and monitoring of infrastructure projects. The specialist will have prepared or assisted in the preparation of preferably 5 environmental impact assessments or equivalents for infrastructure projects financed by ADB or other IFIs., and supervised EMP implementation of infrastructure projects, preferably in Myanmar. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The expert will be responsible for all environmental aspects of the project, including compliance of Phase 1 activities with the approved safeguards documents (IEE and EMP), coordination of environment due diligence of Phase 2 activities, contribution to Benefit Monitoring Evaluation Report and Project Completion Report. Gender and Social Development Specialist. Qualified BSc. or equivalent in social development or related field, with preferably 7 years’ experience in resettlement management, implementation of social safeguards, gender and complaints resolution. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The specialist will be responsible to the Team Leader with all resettlement and social aspects of the project, including monitoring and reporting on compliance with social safeguards, including HIV/AIDS awareness and human trafficking. Resettlement Specialist. Qualified Bachelor/Master. or equivalent in social development or related field, with preferably 7 years’ experience in resettlement management, implementation of social safeguards, gender and complaints resolution. The specialist should have prepared or assisted in the preparation of at least 5 resettlement and ethnic group plan s for infrastructure projects and have been engaged in preferably 2 similar projects in resettlement monitoring and implementation of social safeguards. The specialist will be responsible to the Team Leader with all resettlement and social aspects of the project, including monitoring and reporting on compliance with the resettlement and ethnic group plan and social safeguards. Experience with ADB funded or multi lateral donor funded projects are desirable. Procurement Specialist. Professionally qualified civil engineer or equivalent, preferably with 10 years’ relevant experience in procurement under multilateral development bank procedures, with some of this experience in institutional and physical environments similar to those prevailing in Myanmar. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The Procurement Specialist will be responsible to the Team Leader for procurement aspects of this project and Phase 2, and others that may arise. Transport Economist. Professionally qualified economist preferably with preferably 7 years’ experience in preparing economic assessments of transport sector projects, with a substantial part of this experience on ADB or similar development bank-financed projects. The specialist will preferably be able to demonstrate experience with the application of Highway Development and Management Tool (HDM4) analysis although the economic analysis for the project has not adopted HDM4; this is for the case where Phase 2 happens to use HDM4. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The transport economist will be responsible to the Team Leader for the economic aspect of the project. The transport economist will also be responsible to the Team Leader for preparing and implementing a monitoring and evaluation program that will enable the effectiveness of the project to be assessed, during implementation and in service. Materials engineer. Professionally qualified civil engineer or equivalent qualification preferably with preferably 7 years’ experience in material testing and checking the quality of the materials. Assist DRRD in supervising the contractors as to material relevant issues including approval of

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materials suggested by the contractors. Assist the Team Leader in testing and checking the quality of the materials during detailed engineering design and bid document preparations as to quantity survey. Quantity Surveyor. Professionally qualified civil engineer or equivalent qualification preferably with preferably 7 years’ experience in quantity survey and cost estimation. Assist DRRD in preparing Withdrawal Applications for ADB by verifying the invoices from the contractors and assist the Team Leader during detailed engineering design and bid document preparations as to quantity survey. Rural Road Maintenance Specialist. Professionally qualified civil engineer or equivalent qualification preferably with preferably 7 years’ experience in preparing road maintenance programs and implementing the program. National Consultants (refer Terms of Reference Table 2) Deputy Team Leader/Pavement Engineer. Professionally qualified civil engineer, or equivalent, preferably with 15 years’ experience in road construction, of which preferably 10 years should be spent on site in the contract administration and supervision of road and bridge works. The Deputy Team Leader will be responsible to the Team Leader for the effective implementation of the project and for managing the relationship between the consulting team and the PMU. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. Design Engineer. A civil engineer with minimum Bachelors’ degree or equivalent qualification in engineering or a related field, and preferably 5 years with a basic range of design experience including computer operations relevant to the project’s activities and pavement design. Actual inputs to be aligned with project requirements and contractors’ work schedules. Structural Engineer. A civil engineer with minimum Bachelors’ degree or equivalent, with 5 years’ experience in bridge design and supervision of bridge construction. Materials Engineer. A civil engineer with minimum Bachelors’ degree or equivalent, with 5 years’ experience, including preferably 5 years for the design, specification and testing of road pavements, sub-grade, road and bridge construction materials, concrete materials, and others as required. Inspectors (2). A civil engineer with minimum Bachelors’ degree or equivalent, with 10 years’ or equivalent qualification in engineering or a related field, and preferably with a basic range of experience to cover surveying, earthworks, site testing, concrete structures and bitumen-based surfacing. Actual inputs to be aligned with contractors’ work schedules. Environment and OSH Specialist. A specialist with minimum BSc or equivalent in environment engineering, environmental management, occupational safety and health (OSH), or related field with relevant experience for at least 5 years in supervising EMP and OSH aspects of infrastructure projects. The specialist will work with and be trained by the international environmental specialist in environmental management, OSH to the requirements of ADB and other IFIs. Gender and Social Development Specialist. With BSc or equivalent in social development or related field, preferably 5 years’ relevant experience, to work with and be trained by the

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international resettlement/social development specialist in implementation of social safeguards, complaints resolution, gender and all other aspects of the international specialist’s scope of work. Resettlement Specialist. With BA or equivalent in social development or related field, preferably 5 years’ relevant experience, to work with and be trained by the international resettlement/social development specialist in resettlement management and implementation of social safeguards. Road Safety Specialist. A civil engineer with minimum Bachelors’ degree or equivalent, with 5 years’ experience in road safety, occupational safety and health (OSH), or a related field, and preferably 3 years’ experience in preparing and implementing road safety programs and construction safety supervision. Quantity Surveyor. A civil engineer with minimum Bachelors’ degree or equivalent, with 5 years’ experience in quantity survey and cost estimation. Assist DRRD in preparing Withdrawal Applications for ADB by verifying the invoices from the contractors and assist the Team Leader during detailed engineering design and bid document preparations as to quantity survey. Procurement Specialist. Professionally qualified civil engineer or equivalent, preferably with 10 years’ relevant experience in procurement under multilateral development bank procedures, with some of this experience in institutional and physical environments similar to those prevailing in Myanmar. The expert should have demonstrated satisfactory performance if he/she was involved in work for MOC in the past 5 years. The Procurement Specialist will be responsible to the Team Leader for procurement aspects of this project and Phase 2, and others that may arise.