Asian Development Bank Nepal Resident Mission w 94% nasi 23 December 2015 Mr. Lok Darshan Regmi Secretary Ministry of Finance Singha Durbar, Kathmandu Dear Mr. Regmi: Subject: 3260: Earthquake Emergency Assistance Project — Findings of Project Inception Mission We express our sincere appreciation for the cooperation extended by the Government to the Inception Mission of the subject project fielded by Nepal Resident Mission of Asian Development Bank from 15 November-i4 December 2015. The Mission's findings and recommendations are recorded in the attached Aide Memoire (AM) and attachments, whose draft was discussed at the wrap-up meeting under your chairpersonship on 14 December 2016. ‘As discussed during the wrap-up meeting, we would also like to request for your close monitoring of the agreed actions mentioned in the AM. We request for the confirmation of this Aide Memoire by 30 December 2015. Yours sincerely, K Gokoyae— Kenichi Yokoyama Country Drectat, cc: Mr. Bishwa Prakash Pandit, Secretary, MOE Mr. Madhav Prasad Regmi, Regmi, Secretary, MOFALD Mr. Gajendra Thakur, Secretary, MOPIT Mr. Arjun Kumar Karki, Secretary, MOUD Mr. Madhu Kumar Marasini, Chief and Joint Secretary, IECCD, MOF Mr. Khagaraj Baral, Director General, DOE Mr. Jeevan Kumar Shrestha, Director General, DOLIDAR Mr. Madhav Karki, Director General, DOR Mr. Ramesh Prasad Singh, Director General, DUDBC Metro Park Builing,Lazimpat, Ward No. 2 Td +9771 4005120 adbm@adb org 0. Box 5017, Kathmandu, Nepal wwwadb org/nemLOAN No. 3260-NEP: EARTHQUAKE EMERGENCY ASSISTANCE PROJECT AIDE MEMOIRE OF INCEPTION MISSION (15 November - 14 December 2015) I. INTRODUCTION 1. Nepal Resident Mission of Asian Development Bank (ADB) fielded a project inception mission (the Mission) for Loan 3260 (NEP): Earthquake Emergency Assistance Project (EEAP; the Project) from 15 November to 14 December 2015." The purpose of the Mission are to (i) review the adequacy of the preparatory work of the Executing Agency (EA) and the Implementing Agencies (IAs), particularly recruiting staff, engaging consultants, procuring goods and related services, and works; (li) prepare project-specific check list for subproject selection criteria of implementation requirements; (ii) discuss and confirm the timetable for procurement and implementation; (iv) discuss and agree upon budget allocations and provisions for counterpart funding for the project; (v) finalize and discuss in detail with the IAs the project administration manual (PAM), which was initiated and drafted during project appraisal, and (vi) update the procurement plan, and contract award and disbursement projection for 2016, and (vi) establish clear common understanding on detailed arrangements, procedures, and requirements of the Project with the EA/IAs to initiate and accelerate for smooth implementation. 2, The Mission met with the Ministry of Finance (MOF), Ministry of Physical Infrastructure and Transport (MOPIT), Ministry of Urban Development (MOUD), Ministry of Education (MOE), and Ministry of Federal Affairs and Local Development (MOFALD). A list of persons met is in Attachment 1. The Mission visited the selected subproject sites in Kavre (for Schools), Dolkha (for Rural Roads), Gorkha and Dhading (for Government Facilities), and met with the stakeholders. The wrap-up meeting was held on 14 December 2015, under the chairmanship of the Finance Secretary and the Secretary of National Planning Commission, and all IAs. This aide memoire (and its attachments) records the Mission’s findings, and discussions and agreement with the project officials concemed, which are subject to confirmation by the higher authorities of ADB and the Government. ll. BACKGROUND 3. ADB on 24 June 2015 approved the emergency assistance project EAP with special drawing rights (SDR) for 143,212,000 equivalents to $200 million and TA of $1.5 million. The loan agreement was signed on 21 August 2015, and deciared effective on 10 September 2015. The loan is closing on 31 March 2019, with estimated Project completion date of 30 September 2018. The total Project cost is $232.0 million, and ADB is financing $200 million (about 86%) through loan, and the balance being funded by the Government. * The Mission comprised of Tka Limbu, Unit Head PMU as Mission Leader, Govinda Gewall, Senior Project Officer, Laxmi Sharma, Senior Project Officer, Bhupendra Bhatt, Procurement Officer, Smita Gyawali, Project Officer, and Shiva Poudel, Project Analyst as Mission Members. Country Director Kenichi Yokoyama participated in all important meetings and field visits. Deepak B Singh, Senior Environmental Officer, Laxmi P Subedi, Senior Social Safeguard Officer, Narendra Chand, Senior Procurement Officer, Suman Subba, Senior Social Development Officer (Gender) and Arjun Neupane, Asc. Financial Control Officer paricipated in the warp up meeting, provided inputs in the Aide moire on the respective area of due dligence.4. The outcome of the Project is to resume the critical economic and social services with disaster-resilient infrastructure with (i) 28% of total earthquake damaged roads improved and made operational; (ii) enrollment rates in basic and secondary schools, for boys and girs, restored to pre-earthquake level in project districts, with at least 350,000 students benefitting from new or improved facilities; and (ji) 11 district HQs have permanent and safer service catering government buildings. 5. The Project funds the following four components (outputs): Qutput 1: Schools are rebuilt and upgraded - at least 700 schools will be rebuilt or retrofitted in line with school reconstruction plans including five model schools, Qutput 2: Roads and bridges are rehabilitated and/or reconstructed - about 135 km of strategic: roads and about 450 km of rural roads damaged by the earthquake and landslides will be rehabilitated (with target of 20% women in workforce), Output 3: District-level government facilities constructed and/or rebuilt - about 300 district-level ‘government buildings will be rebuilt or retrofitted to disaster resilient standards with basic utilities, and furnished; Output 4: Disaster preparedness and management capacities strenathened - all outputs are ‘assured to be disaster risk resilient. Engineering divisions of IAs will be strengthened. ‘About 500 staff of IAs acquire skills on disaster risk reduction technical approaches, 6. __ National Reconstruction Authority (NRA) has been envisaged as the EA. In the interim, MOF is acting as an EA. Inter-ministerial project steering committee chaired by the Finance Secretary will guide the project implementation and review the progress and results at least twice a year. The Department of Education (DOE) for Output 1, Department of Road (DOR) for Output 2 (Strategic Roads), Department of Local Infrastructure Development and Agricultural Roads (DOLIDAR) for Output 2 (Rural Roads), and Department of Urban Development and Building Construction (DUDBC) for Output 3 are the implementing agencies (IAs). Output 4 will be implemented by all four IAs collectively. Taking into account the progress in identification, design and preparatory works for procurement the Project's progress as of now is estimated at ‘approx.4% after the elapsed of implementation period of 16%. Ill, MISSION’S FINDINGS A. Project Management and Implementation Arrangement 7. Project Management Unit (PMU). In the absence of NRA, establishment of PMU responsible, among others, for establishing a unified programiproject management information system (MIS) to monitor and evaluate the performance of R&R across sectors and different geographical location has been delayed. The Government has decided the NPC to be a care taker of NRA until it is established. The parliament has approved the NRA Act on 16 December 2015 and the Mission anticipates earliest establishment of full -fledged NRA. 8. Project Implementation Unit (PIU) and District Implementation Unit (DIU). The Mission reviewed the status of establishing the PIUs and DIUs, their adequacy and readiness to meet the project's urgency. The PIUs have all been established, and DIUs establishment are in progress. Summary of PIU/DIU establishment is in Table 1Table tatus of Establishment of PIU and DIUS ‘Status of PiU / DIU Establishment ‘Action to be taken. DOE PIU - the following is the existing arrangement Project Director -DG (adhoc) Project Manager- SDE -1 Engineer - 4 ‘Sub-engineer- 4 (vacant) Engineer (contract) ~ 1 (Vacant) ‘Sub-Engineer (contract) 2 (vacant) ‘Account Officer-1 ‘Account Associate- 1 Program Officers-2 Section Officer-1 Admin Assistant: 4 DIU ~ all 8 DIUs to have following arrangement DEO will act as DIU Manager -1 (each) Engineer - 1 each (vacant In Dolakha, Sindhupalchok, Okhaldhunga, Ramachhap) Sub-engineer ~ 6 each (vacant in Bhaktapur-3, Kavre-2, Sindhupalchowk-3, Sindhul-4, Okhaldhunga-4, Ramechap-5 and Dolakha-4), Project Director- JS level to be assigned; > DOE to expedite engagement ofall the vacancy for contractual engineers (14) & contractual sub-engineers (124) DOLIDAR PIU established with following arrangement ‘© Project Director ~ DDGDOLIDAR + Senior Divisional Engineer -1, + Civil Engineers -2, * Social Development Officer -1, and «Account officer Eijetrorasstnes; + Other staff 6. DIU established in all 12 districts as following: * Project Coordinator [LDO ]-1; «Project Manager [Chief DTO, in-charge for day-to-day work] - 1; Engineer - Sub-engineer under DDC - vet nts - xx (yet to be designated istricts). ins Account officer in PIU to be assigned ASAP; > Accountants ~ to be designated in some districts). DOR PIU established with following arrangement © Project Directorate (ADB) acting as PIU. DIU ~3 DIUs to be established as following Project Chief (SDE level) -1 (vacant) Engineer-{ (vacant) ‘Administrative Clerk-t (vacant) ‘Accountant-1 (vacant) > Project in charge (SDE) and other positions to be approved by December 2015 and DIUs established;* Office Assistants-3 (vacant) DUDBC | PiU established with following arrangement | > Notice of Recruitment for ‘© Project Director (DDG) - 1 contractually appointing 3 Civil ‘© Deputy Project Director (SDE) - Engineers & 5 Sub-engineers for © Engineers -2 each DIU to be expedited ‘Computer Operator - 1 (published on 9” Dec.) DIU -of the 11 DiUs, 4 already existing and 7 are recently established as following - DE - 1 Engineers - 2 ‘Sub engineers ~ 2 Overseers - 2 ‘Accountant - 1 Site supervisor - 1 B, Subproject Selection and Preparation 9. Subprojects Selection. Subprojects selection criteria and procedures were agreed between ADB and the Government at appraisal [ref. Subproject Selection Criteria and Approval Procedures, Appendix 5 of Project Administration Manual (PAM)]. The procedures include (1) ‘endorsement by the EA of the selection of subprojects, (2) ADB's prior approval of the selection of the first subproject under each IA/PIU; and (3) ADB's prior approval of all subprojects that exceed $5 million each. Selection of all other subprojects, excluding those below $500,000, need to be sent through PMU to ADB. Following are the status of subproject selection: © Output 1: The DOE has submitted the first batch of 11 schools in Kavre district for reconstruction. In addition, based on the Post Disaster Needs Assessment (PDNA) and latest version of EMIS database—a list of 205 schools with two categories —Batch 1a (uly damaged) with 140 schools and Batch 1b (average 75% damaged) with 65 schools have been identified. However, after the site visit, the Mission realized, all school subprojects require detailed field surveys and verification. ADB is in the process of mobilizing a group of surveyors who will collect the details as prescribed in the Survey For (Attachment 2). The lists of sub-projects for each copssenent are in Attachment 3. «Output 2: The selectKabf the subprojects through DDC FERC (25 sub-projects in 12 districts —with approx. 450 km for Rural Roads) and 4 sub-projects in 4 districts — approx.135 km for Strategic Roads) are completed and in the process of detail study. © Output 3: List of Government facilities in 11 district headquarters —with transitional buidings (333 Nos), offices for new construction (88 offices) and repair and retrofit (85 buiidings) are identified, However, they need site verification as many of the reconstruction and retrofit are being’ done by the Government's own budget. The first batch of 167 transitional buildings is already in the procurement process. The verification of second batch of transitional ‘buildings, office buildings for new construction and repair/retrofit are in process and needs to be completed as soon as possible. 40. 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This has delayed the program approval and operating of imprest account. There was a gap of information among the accountants—the use of the budget head “Reconstruction Fund" was not clear to many of the IA staff. Hence, some IAs was considering using their existing annual budget head to book the expenses. Now the programs are approved and Imprest accounts opening are progressing. The EA and IAs have confirmed —all necessary actions for imprest account establishment and WAs submission for imprest advance equivalent to next six months expenditure will be made by 23 Dec 2015. Status of program approval and imprest account establishment are in Table 3. Table 3: Program approval and imprest account establishment Tas ‘Status of Program Approval (FY 2016/16) | Status of imprest account opening DOE ‘= Approved by NPC on 15 Dec 2015. > Imprest account is opened on 27 December 2015 > WA for imprest advence for $ 7.9 million expected on 23 Dec 2015 DOLIDAR—} + Prog approved from NPC (budget ~~} > ~Imprest accounts opened on 21 head is missing) December 2015 > WA for imprest advance for $ 4.3, million submitted on 21 Dec 2015 DOR = Approved on 17 Dec 2016. > imprest account is opened on 21 December 2015 > WA for imprest advance for $ 2.9 million submitted on 21 Dec 2015. DUDBC ~* Submitted to NPC on 16 Dec 2016 after | > Imprest account is opened on 18 MOUD clearance. Itis expected to be December 2015 approved by NPC- by end Dec 2016. > WA for imprest advance for $ 3.1 million submitted on 18 Dec 2015 12. _ Financing Plan Details. The loan document has not provided the detailed breakdown of the financing plan for different components of the Project; hence a detailed breakdown for each IA are prepared based on the procurement plan agreed at the project appraisal and summarized in Table 4. The figures have been agreed upon with the EA/IAs for future compliance:oor0z | ooze [2918] soy | sxse| ovez| ove | oore] vrey | ov | ver | eres] zve | oses ever | ose 000 | 00% Zee | 000 0 | o0% vez [ooo [set [ooo [sz [ero [ooo [ero |wvo |oo0 |rvo [eso | 000 | eso ie we [ooo [we oss [ooo [oso [ooo |so {ost [ovo [ost jost [ooo [ost [ove |o00 | ove e98 [ooo |oo0 | 000 ev [ooo [ver |ozz [ooo jozz [ave |oo0 | s0e cose: [oszz|zeez|eor | oove|orez|ooe | once | osee [ors | cosy | ees |zre | osez gay | Noo | sav | Noo | teo1 | aav | Noo | leo | sav | Noo | io1 | gav | Noo | roL. W101 oaana ET uvariog, 300 (uomu ¢ up) weuedwiog 3809 Jo UORROONY =F 81421D. Procurement Plan for Goods, Works and Consulting Services 13. Consultants. At appraisal, a total of 2,625 person-months of consuitant services were estimated by the IAs, Circumventing the bottlenecks that hindered the emergency response, the IAs took various actions, including the use of (1) donor-partner resource to finance consultants (DOLIDAR with SDC for expediency in engagement process; and (2) the existing ADB-funded consultant resources (DOR and DOE), to meet the part of immediate consultants’ need). As envisaged in the PAM various individual consultants and firms for DSC are in the process of recruitment. Summary of consultant recruitment and their adjusted inputs are Table 5. The Mission and PIUs have discussed and agreed to adjust the input of some individual consultants. In particular, DUDBC requested to cancel the recruitment process of Interior Designer (Nat) -1 and Material Engineer (Nat) — 1; and instead requested to recruit (as a replacement) Civil Engineer (Nat) ~ 1 and Sanitation Engineer (Nat) - 1. The Mission discussed and agreed to it. The Mission also discussed to a request from DUDBC that it will need (i) a DSC -team of individuals or a firm, and (i) a team of structural engineers to assess the structural integrity of Government buildings using the diagnostic tools. The Mission requested to PIU/DUDBC to provide the proposals with the TORs and cost estimate details for ADB's approval. Table 8: Status of Consultant recruitment Tas ‘Status of Consultant Recruitment ‘Retion Agreed Individual consultants DSCT DOE | Evaluation is submitted to ADB for | » Submission-0 | > Finalize the recruitment approval of the following expected on | for DSC expected | of DSC by Q1/2016. 23 Dec. 2015 to ADB on 23 Dec ‘© Design Engineer (Nat) -4 2018; ‘* Procurement & Contract Management Expert (Nat) ~ 4 Financial Management Expert ~ 1 ‘Draft Person - 1 Quantity Surveyor- 1 DOLIDAR | Negotiated contract submitted to ADB | Recruitment of DSC | > PIU recruit the following ‘on 16 Dec 2015 for the following: through SDC’s 5 consultant in Q2/2016 Procurement Expert (Nat) - 1; support ($0.54 M)is | (ifneeded) * Design & Supervision Expert-1; | in advanced stage- | « Env. Expert (Nat) - 1, ‘* Financial Management - 1 RFP issued - 27 * Social / Resettlement ADB approval on 22 December 2015 Oct 2015; Expert (Nat) — 1, * Selection '» GESI Expert (Nat) -1, finalized by Jan Contract Management 2016; Expert (Nat) - 2 DOR = * Submission -1 to | > DOR to submit the ‘ADB on 25 Nov revised evaluation 2015. criteria to ADB by 24 © ADB sent Dec 2015 ‘comments on the | > Finalize the recruitment TOR on 14 Dec of DSC by 21/2016 2016. DUDBC | Negotiation in process = > Provision for DSC + Proj. Management Expert (int) ~1 (Individual or Firm) ‘= Architect (Nat) ~2 Under the DUDBC. ‘+ MIS Expert (Nat) ~ 4 project:TAs ‘Status of Consultant Recruitment ‘Aetion Agreed Individual consultants DSC/ Firm > Provision for a set of nt EOIs) Structural engineers to check the building For re-advertised (insuffi « Structural Engineer (Nat) ~ Electrical Engineer (Nat) — 1 integrity is also agreed - this will help identify the New input request - ing retrofit need Civil Engineer(Nat) - 4 (item 3) * Sanitation Engineer (Nat) 1 > All individual consultants are recruited and fielded Cancellation of recruitment- by end Jan 2016 * Interior Designer (Nat) -1 ‘= Material Engineer (Nat) - 4 14. Procurement of Goods and Works. All PIUs need external resources to help them administering the procurement and day-to-day contract management. Except for Strategic Roads component other PIUs are in the process of recruiting Procurement and Contract Management Expert as loan-funded individual consultants. 15. PIUs anticipate awarding the first batch of construction contracts in the first quarter of 2016, the recruitment and deployment of procurement experts need to be expedited. The status of procurement in all components is summarized in the Table 6. The procurement plans are in Attachment 4. Table 6: Status of procurement of Goods and Works Tas Status ‘Retion to follow DOE * Bid document for first batch Primary Schools | > IFB by 31 Dec 2016, in Kavre is prepared (NCB). Site verification, | > Contract Award by 31 March design and BOQ in process. 2016 DOLIDAR + CPIU is preparing first batch bidding > _IFB of first package by mid J documents for 6 subprojects (NCB) in 2016; Kathmandu valley re whose design | > Contract Award of first will be ready by Janey 2016. package by March 2016 DOR ‘* Detail Design report for M-H and S-C will be > IFB of two packages M-S and ready by early Qt 2016. DOR is preparing G-A-D by mid Jan 2016; Bidding Document (ICB. > Contract Award of two packages by April 2016 DUDES + First ot of transitional building tendered on 27 | > Contract Award of Batch 7 Nov 2015 and closes on 28 Dec 2015. transitional building by 34 * Site verification for another batch, new March 2016; building and repair/retroft needed. > IFB of Batch 2 Transitional Building by Jan 2016 16. The Mission reviewed jointly with the IAs the procurement plan in the PAM and updated which is in Attachment 5.E. Contract Awards and Disbursement Projections for 2015/16 47. The Mission and PlUs jointly assessed the contract awards and disbursement projections for 2016. A total of $136.2 million of contracts will be awarded, of which a total of $24.7 million will be disbursed within year 2016. Quarterly distribution of awards and disbursements are given in Table 7. ‘Table 7: Projected Contract Awards and Disbursements in 2016 (§ million) af a as. om, las | Achievements [Quarter [Cum,| Quarter [ Gum. | Quarter | Cum. | Quarter | Cum. DOE [ContractAward | 0.0 | 00] 117 | 117] 174 | 201] 148 | 439 Disbursement [| 0.0 [00] 11 | 11[ 34] 44[ 40 | 84 DOR [Contract Award 0 O}a80| tao] tos | 285| 05 | 290 Saooanen bo ooieirs—-t8[s0| 48/2068 DOUDAR [Contract Award | 85 | 86] 63 | 148| 137 | 285| 112 | 997 Disbursement | 0.0] 0009 | 09| 45 | 24[ 20 | 44 DUDBC [Contract Award | 048 | 0.44] 607 | 645 | 108 | 1725] 63 | 2355 Disbursement | 0.0 | 00] 01 | ot] 20 | 21] 30 | 64 Tous [Contract Award | 8.04 | 8.04 | ~az01 [609s |~s24 | on s28 | 762 Disbursement | 00 | 00| 39 | 39] 99 | 137] 110 | 247 F. Updated Project Implementation Plan 48, Current Status of Project Implementation. Although no physical works have yet started, the Mission estimated the project's overall physical progress, taking into account of subproject identification and design, at 4.3%. A detailed framework to assess project's physical progress has been developed (Attachment 6)—which will be used for the remaining project period for consistent measurement of project's physical progress. Current status and progress under individual components are summarized in Table 8. Table 8: Summary Status of Project Implementation Tas ‘Summary status of physical implementation Progress in% DOE First batch site verification and survey started, covering up to 20 schools (5% of | 0.1% the total scope) in Kavre district. DOR First batch design completed for 2 subprojects (S-C and H-M roads; 55% of the | 8.8% total roads), and the draft bidding documents submitted to ADB in Nov 2018. DOLIDAR | First batch selection and technical design of six roads (86 km, 20% of total 3.0% scope) completed. Award of civil works contract for the first batch is expected by March 2016. DUDBC | First batch design (transitional support) complete, and bid invitation had been | 7.9% Issued for 167/333 (IFB published on 27 November 2015). 19, Updated Implementation Plan. The PAM developed at the time of project appraisal and subsequently agreed upon between the government and ADB envisage construction works to commence at the beginning of 2016. This initial plan is now proven too optimistic and major part of the first batch of construction contracts are now anticipated to start only in the second quarter (Q2) of 2016. Nevertheless, with much-awaited fielding of the design and supervision 10consultants (DSCs) in early 2016, the Mission and the government shared the expectation that the project can be completed by September 2018 as originally set. Towards reaching the completion goal, IAs provided the Mission the phased delivery of outputs as summarized in Table 9 and further explained in the project implementation chart as shown in Figure 1. Table 9: Phasing of Project Works TAs Ist Batch 2nd Batch 3rd Batch onward DOE 416-20 schools in Kavre, | Approx. 180-185 schools | Approx. 500 schools and § Award (1): Q1- 2016 ‘Award (2): a3/04-2016 | Model schools Award (3): Q1/Q2- 2017 DOR Singhatl-Charikot (33 km) _| Melamchi-Helambu (47 kr) Dhading-Arughat-Gorkha | Award(2): Q4-2016 (61 km) Award(1); — @2-2016 DOLIDAR | Approx. 86 km roads in | Approx. 66 km ‘Approx. 140 km in 3rd Kathmandu valley and | Award (2):—G2-2016 | batch Kavre district Award(3); 03-2016 Award (1): Q1-2016 Approx. 118 km in th batch Award (4): Q4-2016 ‘Approx. 62 km in Sth batch Award (6): 01-2017 DuDBC | 333 buldings for transitional | 88 new buildings, clustered | Max. 85 buildings minor ‘support for completion in two butches, and clustered for each district Award (1-a): Q1-2016 Award (1-b): Q2-2016 for each district Award (2): Q3/Q4-2016 Q1-2017 repair, clustered for each district Award Q3/Q4-2016 11lzs|nJorfe|e|z|ols|»lelz (+ lzr|jo zfa|s|rlelz[e sizjolsirle aioe. i TORTS SOTO PAEPAT Ty STATG. Donor Coordination 20. The Mission also met and discussed with agencies having direct involvement in the Earthquake Rehabilitation and Reconstruction Program. The Mission found opportunities to enhance collaboration with donor partners and the government to jointly enhance the effectiveness in facilitating the implementation of R&R program as summarized in Table 10. Table 10: Collaboration with Donor Partners ‘gency | Area of collaboration Collaborative actions agreed upon Taean ional |* Disaster-eslient (earthquake | Basic design standard was agreed upon at the Cooperation | Proof) design standard of tripartite meeting among ADB, JICA and DOE noo buildings on 22 November 2015. ica) + Schools role of communities in | ADB and JICA noted the importance of jointly Construction supervision of schoo! | seeking the mechanism by which direct project rebuilding and others support can be provided to the School Management Committees (SMCs) and other community members for their participation in construction supervision and O&M, and other disaster reslient activites. + Schools ~ Management [ADB and JICA noted the possible merits of Information System (MIS) for _| sharing the common MIS framework to monitor monitoring and evaluation of _| the school reconstruction activities, and agreed reconstruction activities to continue discussions on this Beiopment |* Project design, supervision and | SDC has approved about $45 millon grant for Cosperaton’| monitoring support /cooperation | financing project implementation, manegement oo and supervision (PMIS) consultants. SDC wil recruit a set of consultant team comprising of team leader/engineer 1, sub- engineers 2, assistant sub-engineers 6, environment and safeguard officer 1, and gender officer 1 for each cstit at DPIU. H. Safeguard Action Plans 21. The IAs assured the Mission that subproject preparation and implementation will follow the safeguard requirements that are specified in the Environmental Assessment and Review Framework (EARF) and the Resettlement Framework (RF) of the project. Summary of the ‘safeguard actions required throughout the subproject life is in Attachment 7. 22. All PIUs agreed that the safeguard experts are needed to meet environmental and social ‘safeguard requirements, with their most immediate task to classify the subprojects in terms of the anticipated environmental and social impacts, and prepare safeguard plans, monitor compliance and submit safeguards monitoring reports. The Mission sought and obtained assurances from all IAs that one officer in each PIU will be appointed as safeguard focal point for communication and coordination with ADB. The Mission also obtained the assurance from the EA that an overall safeguard coordinator/focal point will also be appointed within PMU as soon as it is established. The Mission further indicated that ADB/NRM will conduct orientation training immediately after the safeguard focal points are appointed. To simplify the process the BMission considered preparing a unified Initial Environmental Examination report for the subprojects—in particular for the Schools and Government buildings reconstruction. 1. Gender Equity and Social Inclusion (GES!) 23, At appraisal, the GES! action plan was developed. The project is still at the startup phase, GESI consultant has not been recruited, and many of the GESI action plan activities are stil to be initiated. The Mission noted that DOE plans to recruit a GES! expert as a member of DSC team, and once DOE GES! consultant is in place, the plan's activities specified for school component will be initiated. Similarly, DOLIDAR also plans to recruit a GESI consultant by the second quarter of 2016. There are, however, some activities/outputs in the action plan for which a GESI consultant for the overall project is necessary. The Mission proposed, and obtained agreement of the EA, that ADB recruit a GESI consultant to cover the initial phase of project implementation, using its TA resources, on condition that this will not divert PIU’s attention from critical startup of reconstruction. GESI TA consultant should be attached to the PMU as soon as itis established. Summary of the current status of GES! action plan implementation and a series of actions to fulfill the action plan goal are summarized in Attachment 8. J. Monitoring and Evaluation 24. Development of Management Information System (MIS). The EA in consultation with ‘ADB was to develop within 6 months of loan effectiveness, a project performance monitoring and reporting system. Accordingly, for a unified web-based MIS to consolidate project/program activities among the multiple IAs and PIUs is being developed. The Mission, EA and IAs reconfirmed the need for such unified MIS, which would help the government and ADB maintain integrity in managing the multi-sectoral and multi-agency reconstruction and recovery efforts, enable effective collaboration between EA and IAs in identifying and resolving project/portfolio management issues, relieve PIUs and DIUs from the burden of preparing the regular monitoring reports, and enable the ready access of information to other project/program stakeholders and general public (under varying levels of access control). Albeit these clear merits, the Mission also noted that development and operationalization of such new, comprehensive MIS face inevitable challenges. A TA consultant (MIS and software Development Specialist) is engaged for MIS design, who is working in close coordination with all PIUs and their MIS consutants. 25. Quarterly Progress Report. All IAs are required to submit its quarterly progress report to ADB on a regular basis—whose template is in Attachment 9. 26. Auditing. MOF and all four implementing agencies are reminded of the project financial ‘statements to be audited in accordance with Intemational Standards on Auditing or International Standards for Supreme Audit Institutions and with the Government's audit regulations, by an independent auditor acceptable to ADB. As the constitutionally mandated supreme audit institution, it is expected that the OAGN shall conduct the audit. The audited PFSs will be submitted in the English language to ADB within 9 months of the end of the fiscal year by the individually by each implementing agency.” 27. Safeguards Monitoring. The PMU will prepare semi-annual monitoring reporss (one for environment and one for involuntary resettlement) that describe progress of safeguards 2 three month extension is being given due to the need for consolidating financial data across multiple districts and cost centers spread-out in Nepal across departments, without full integrated computerized systems. 14implementation, compliance issues, and corrective actions. Reports will be posted in ADB website accessible to the public. Safeguards monitoring requirements including suggested monitoring report formats are in the EARF and Resettlement Framework (available at: http:/www.adb.org/projects/documents/nepal-earthquake-emergency-assistance-project-rp).. 28. Gender and Social Dimensions Monitoring. The PMU will establish a system for collection and analysis of sex, caste- and ethnicity disaggregated data and information at central and district levels and the results will be monitored by the GESI experts at central and district levels and be reflected in Semi-Annual Progress Reports at prescribed format. K, Compliance with Loan Covenants 29, The Mission discussed with EA and IAs on the specific covenants that ADB and the government had agreed to comply with while implementing the project, and jointly assessed the current status of compliance, and further agreed on actions that are needed to ensure the project's full compliance at the next project review. Summary of the assessment and agreed actions are in Attachment 10. 30. Disaster Preparedness—Project's Fourth Output. The Project's intended output — strengthened disaster preparedness and management capacities — is to be achieved through: (i) stronger disaster risk resilience (DRR) built into the infrastructure rebuilt/retrofitted by the project; and (ji) strengthened IAs staff capacities on DRR and disaster risk management, gained through project implementation. While the Mission was generally satisfied with DOR and DOLIDAR ‘components being designed on the *built-back-better” principle, it had some concems on others, and requested, and obtained the agreement of DOE and DUDBC on the following: (1) DOE Component. The Mission attested that DOE, ADB TA consultants, and JICA engineering team agreed on the structural design criteria, allowing schoo! buildings to be re-constructediretrofitted according to the consistent engineering approach. Prototype design of schools for PS2, SS, LS and HS will be sent to DUDBC for approval (of which PS2 had already been approved), and the final designs of individual schools will be reviewed and approved by DUDBC or by the authority as delegated by it. The Mission advised DOE for adequate technical competency to review such designs; and (@) QUOEG Component. The DUDES intonds fo rebuild/retrofit the damaged goverment i$ according to their existing design standard. While the Mission agreed with this aproseh but also suggested, and obtained agreement from DUDBC, that identification/examination of retrofiting needs should cover the buildings that may appear to have suffered no damage. Such review may reveal additional measures that are needed to ensure full disaster risk resilience even against the more severe earthquake in the future, and those measures, if found, should be applied progressively to the designs of new buildings that are to start very soon. L. Technical Assistance (TA 8910) 31. A TA approved concurrently with the loan, will continue to provide various capacity building activities, technical inputs including safeguards, MIS Expert, surveyors, financial management, structural engineer, procurement, design engineer and architects - who will ‘support project implementation. 15Iv. ISSUES 32. Delays in Establishment of PMU, PIU and DIU. PMU has not been yet established due to the delays of NRA establishment. No physical works have yet started; the Mission estimated the project's overall physical progress, taking into account of subproject identification and design, at 4.3%. PIU in DOE is yet to be fully established. DIUs in DOR yet not established. The PIU at DOLIDAR also not full due to absence of Account Officer. 33. Roles of School Management Committees (SMC) in School Reconstruction. The Mission took note of MOE’s aspiration to involve SMCs in school construction. The Mission indicated that the contract sizes for each school would far exceed the normal threshold value set for community procurement, but nevertheless, assured that the possibility and appropriateness of SMC involvement in construction should be re-examined at a later stage to those schools with less works and that are located at remote, and hence difficult to engage contractors from outside. Never the less, the SMCs are being consulted for subproject selection during the surveys. Minutes of consultation meeting with SMC will be signed for each subproject. 34. Vehicles for Project Implementation. All PIUs expressed concems that, both Kathmandu and the districts lack vehicles for project supervision and monitoring. Without the sufficient vehicles the project implementation will be affected. The Mission noted that the loan proceeds have no budget allocation for vehicles. The Mission obtained the inventory list of motor vehicles from the PIUs and DIUs (Attachment 11). The Mission recommends for a sufficient budget for vehicle purchase to all PIUs/DIUs in the annual program that can be funded under the loan proceeds or Government's own budget. This issue was discussed during the wrap up meeting. The Ministry of Finance supported for reallocating enough budget for vehicle purchase. Reallocation for vehicles purchase from the contingency will be initiated once this ‘Aide Memoire is confirmed. Table 11 summarizes the budget needed for vehicles purchase— based on the field verification. Table 11: Estimated budget for vehicles To be procured Cari | Unit | Total | Motorbike | Unit | Total | Total (A+B) tas _| Jeep (A) | Cost | (A) ®) Cost | (8) {[$ million} DOE, yo] 005] 05 19| 0.0025 | 0.0475 0.55 DOR 4] 00s] 02 4{ 0.0025] 0.01 0.24 DUDBC. 10] 0.05] 05 15| 0.0025 | 0.0375 0.54 DOLIDAR 11 | 0.05 | 0.55: 28 [0.0025] 0.07 0.62 Total 36[ 02] 1.75 66 oot] 0.47 4.92 35. Funding Gap in Rural Roads. The initial Project design did not provision cost of construction of motorable bridges. This means that the roads may be closed at river/stream crossing sections at the time of high water passage, which needs to be avoided by providing bridges particularly in road sections of high transport passage. Assuming that construction of at least one bridge would be required in each road on average, the total number of bridges to be constructed is estimated to be 25. DOLIDAR has estimated $0.7 million cost for each RCC bridge on average, which indicates $17.5 million resource gap for bridges. However, this gap can be reduced to about $15 million if RCC bridges are combined with bailey and truss bridges 16based on feasibility study. It was agreed to explore the possibility of meeting the resource gap by the government and ADB both. 36. In addition to motorable bridges, the PDNA had estimated the length of the damaged roads in affected 12 districts requiring rehabilitation/reconstruction to be 434 km only. However, the project design no\ targeted for rehabilitation of about 20 roads covering more than 450 km, There could be possible resource gap. Due to the increased road length. 37, Model Schools Concept. The Project envisaged developing five model schools. However, there are no concept/guidelines and definition of model schools. This has hampered in selection and design process of model schools. The Mission requested, the Government start consultation and decision process as early as possible, and conclude the modality by Jan 2016. 38, — Decentralized Procurement. The DUDBC and DOE expressed concem over a large number of contracts to be managed, and requested that DIUs be authorized to invite, review and evaluate the bids. The Mission explained that the central-level management of procurement is needed for transparency and efficiency. It was agreed that DIU heads should be involved in bid evaluation at PIU, and once evaluation is completed, contracts execution, monitoring and payment to contractors are done at DIU level—which is an established implementation model. V. CONCLUSIONS 39. Issues and Actions Agreed. Table 12 consolidates the key Actions agreed by the Mission with EAJIAs and the MOF. Table 42: Agreed Actions Responsible ‘Agreed Action Pian and Time line Agency DOE PIUIDIU Set-up > Project Director- JS level to be assigned ~ by end 2015 > DOE to expedite engagement of all the vacancy for contractual engineers (14) & contractual sub-engineers (124) and complete by 29 January 2015; Project Preparation > Verification, survey and design of second stage (180-185 schools) by April 2016; > Schools list in Kathmandu and Bhaktapur to be provided to ADB by 31 Dec 2015; > Concept of model schools should be confirmed by 29 Jan 2016, > Guidelines on engaging SMC to be prepared by 31 December 2015. Recruitment of Consultants > Finalize the recruitment of DSC by 1/2016 Procurement of Civil Works > IFB for first package by 31 Dec 2015; > Contract Award of first package by 31 March 2016. DOLIDAR PIUIDIU Set up > Account officer in PIU to be assigned by 31 December 2015 > Accountants - to be designated in some districts - 31 January 2016 Procurement of Civil Works > IFB of first package by mid Jan 2016; > Contract Award of first package by March 2016 DOR PIUIDIU Set up 7Responeitie ‘Agreed Action Plan and Time line Agency > Project In charge and other positions approve by 31 Dec 2015; > DIUs established by 31 Jan 2016; Recruitment of Consultants > Finalize the recruitment of DSC by 1/2016 Procurement of Civil Works > _ IFB of two packages M-S and G-A-D by mid Jan 2016; > Contract Award of two packages by April 2016 DUDEC PIUMDIU Set up: > Recruitment of contract Civil Engineers 3 & Sub-engineers 5 by 31 Jan 2916 Project Proparatior > Number of remaining transitional building to be verified by 31 Dec 2015; > Assessment for structural integrity of government buildings — by March 2016. Recruitment of Consultants > Provide TOR and proposal for DSC and structure engineers by 31 Dec 2015 Procurement of Civil Works > Contract Award of Batch 1 transitional building by 31 March 2016 > IFB for Batch 2 Transitional Building by Jan 2016 "ADB and MOF | > Reallocate loan proceeds for vehicles once the Aide Memoire is confirmed 40, The Mission shared the assessment that the project has faced challenges towards achieving the intended goal, from the continued absence of NRA and fuel crisis. Nevertheless, the Mission expects the project can gain the momentum if the recommended actions in Table 12 re implemented within agreed timeframe. 41. itis unlikely, however, to respond to the urgency of the project, unless (1) a high-level coordinating body and a PMU is established at NRA; (2) individual PIUs in the IAs are equipped with adequate resources — particularly design and supervision consultants; and (3) the DIUs responsible for the reconstruction works are supported by adequate field staff and vehicles. 42. _ Acknowledgement. The Mission appreciates the assurance of the EA and the IAs/PIUs that the progress in carrying out the agreed actions should be closely monitored, and agreed that another comprehensive review of the project's implementation status should be carried out in April, 2016. The Mission expresses its deep appreciation to the government, and the staff of IAs, PIUs and DIUs for the support generously provided to the Mission. 43. Confirmation of the Aide Memoire. The Mi Memoire by 31 December 2015. Tika Limbu Mission Leader, Unit Head - Portfolio Management Nepal Resident Mission Asian Development Bank ion requests confirmation of this Aide 182 geePrNogAaena 2S List of Attachments List of Persons met School Survey Form List of Subprojects, Procurement Plan Updated PAM Framework to assess project's physical progress Safeguard Action Plans GESI Action Plan Quarterly Progress Report Form Matrix of covenants Vehicles Inventory List 19