Project Administration Manual

Project Number: 44058

Loan and/or Grant Number(s): LXXXX; GXXXX
June 2010

Nepal: Kathmandu Sustainable Urban Transport

Project
 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 STAKEHOLDERS – ROLES AND RESPONSIBILITIES 4
B. KEY PERSONS INVOLVED IN IMPLEMENTATION 5
C. PROJECT ORGANIZATION STRUCTURE 6
IV. COSTS AND FINANCING 7
A. DETAILED COST ESTIMATES BY EXPENDITURE CATEGORY 9
B. ALLOCATION AND WITHDRAWAL OF LOAN AND GRANT PROCEEDS 10
C. DETAILED COST ESTIMATES BY FINANCIER 12
D. DETAILED COST ESTIMATES BY OUTPUTS/COMPONENTS 13
E. DETAILED COST ESTIMATES BY YEAR 14
F. CONTRACT AND DISBURSEMENT S-CURVE 15
G. FUND FLOW DIAGRAM 15
V. FINANCIAL MANAGEMENT 16
A. FINANCIAL MANAGEMENT ASSESSMENT 16
B. DISBURSEMENT 17
C. ACCOUNTING 18
D. AUDITING 18
VI. PROCUREMENT AND CONSULTING SERVICES 19
A. ADVANCE CONTRACTING 19
B. PROCUREMENT OF GOODS, WORKS AND CONSULTING SERVICES 19
C. PROCUREMENT PLAN 19
D. CONSULTANT'S TERMS OF REFERENCE 20
VII. SAFEGUARDS 20
VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND
COMMUNICATION 21
A. PROJECT DESIGN AND MONITORING FRAMEWORK 21
B. MONITORING 21
C. EVALUATION 22
D. REPORTING 22
 E. STAKEHOLDER COMMUNICATION STRATEGY 23
IX. ANTICORRUPTION POLICY 23
X. ACCOUNTABILITY MECHANISM 24
XI. RECORD OF PAM CHANGES 24

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 Government and
Asian Development Bank (ADB) policies and procedures. The PAM should include references to all
available templates and instructions either through linkages to relevant URLs or directly incorporated in
the PAM.

The Ministry of Physical Planning and Works (MPPW) and implementing agencies, The Department of
Roads (DOR), the Department of Transport Management (DOTM), the Metropolitan Traffic Police
Division (MTPD), the Kathmandu Metropolitan City (KMC), and the Ministry of Environment (MOE), are
wholly responsible for the implementation of ADB financed projects, as agreed jointly between the
borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff
is responsible to support implementation including compliance by MPPW and implementing agencies of
their obligations and responsibilities for project implementation in accordance with ADB’s policies and
procedures.

At Loan Negotiations the Government and ADB shall agree to the PAM and ensure consistency with the
Loan/Grant Agreement (L-xxxx). Such agreement shall be reflected in the minutes of the Loan
Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan/Grant
Agreement, the provisions of the Loan/Grant Agreement 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.
 Abbreviations

ADB = Asian Development Bank

ADF = Asian Development Fund
BLR = Bishnumati Link Road
CQS = consultant qualification selection
DMF = design and monitoring framework
DoR = Department of Road
DoTM = Department of Transport Management
DSC = Design and Supervision Consultant
EA = Executing Agency
EARF = environmental assessment and review framework
EIA = environmental impact assessment
FNNTE = Federation of Nepalese National Transport Entrepreneurs
HLPCC = High Level Policy and Coordination Committee
IA = Implementing Agency
IC = Implementation Committee
ICB = international competitive bidding
IEE = initial environmental examination
KMC = Kathmandu Metropolitan City
LACFC = Land Acquisition and CompensationFixing Committee
MoE = Ministry of Environment
MoF = Ministry of Finance
MoH = Ministry of Home
MoLD = Ministry of Local Development
MoLT = Ministry of Labor and Transport
MPPW = Ministry of Physical Planning and Works
MTPD = Metropolitan Traffic Police Division
NCB = national competitive bidding
NGOs = nongovernment organizations
NPC = National Planning Commission
O&M = Operation and Maintenance
PAI = project administration instructions
PAM = project administration manual
PD = Project Director
PIU = project implementation unit
PMCBC = Project Management and Capacity Building Consultant
PMCO = Project Management and Coordination Office
PSC = Project Steering Committee
PT = Public Transport
QBS = quality based selection
QCBS = quality- and cost based selection
RF = Resettlement Framework
RP = Resettlement Plan
RRP = report and recommendation of the President to the Board
SBD = standard bidding documents
SOE = statement of expenditure
SUT = Sustainable Urban Transport
TDF = Town Development Fund
TOR = terms of reference
UTS = Urban Transport System
 I. PROJECT DESCRIPTION

Project's rationale, location and beneficiaries

The project will improve the quality of urban life in the capital city of Nepal by delivering a more
efficient, safe, and sustainable urban transport system (UTS), favoring local economic growth
and addressing climate change and air pollution mitigation. The UTS will be enhanced by
focusing on (i) a plan to rationalize and upgrade the existing public transport network, tested
through the implementation of pilot routes provided with electric vehicles; (ii) traffic management
works and measures that will enable heritage routes in the city center to be pedestrianized and
improve general walkability (general walking conditions); and (iii) improvement of air quality
monitoring. The project aims to integrate these components holistically.

Impact and Outcome

The expected impact of the Project will be a more efficient and sustainable urban transport
system within the Kathmandu Valley (KV), favoring local economic growth and addressing
climate change and air pollution mitigation. The expected outcome of the Project will be
improved public transport and walkability, favoring a modal shift from private vehicles and
improving traffic conditions.

Outputs

1. Public Transport is improved, and capacity of the Department of Transport

Management (DOTM) is strengthened
1.1 Institutional strengthening and capacity building for DOTM
1.2 Reorganization plan of the public transport (PT) network
1.3 Implementation of two pilot bus routes, provided with electric vehicles
1.4 Promotion of the PT fleet renewal with low emission vehicle, through the
set up of a financing mechanism
1.5 Study on the reintroduction of trolley-bus services

2. Traffic management is improved

2.1 Improvement of junctions in the city center
2.2 Capacity development program and provision of equipment for the
Metropolitan Traffic Police Division (MTPD)
2.3 Awareness campaign for improved driving behaviors and drivers aspects of
transport

3. Walkability in the city center is improved

3.1 Pedestrianization of heritage routes in the city core
3.2 Improvement of sidewalks in the city center
3.3 Upgrading of the existing and construction of two new pedestrian bridges
3.4 Improvement of the interchange facility and of public space on Kanti Path
3.5 Public private partnership (PPP) advisory support for Kathmandu
Metropolitan City (KMC)

4. The monitoring of air quality is enhanced.

4.1 Provision of solar power back-up systems for the existing monitoring stations
4.2 Provision of two new mobile monitoring stations
4.3 Provision of equipment for emission and mechanical testing
4.4 Data dissemination and awareness campaign
 2
II. IMPLEMENTATION PLANS

A. Project Readiness Activities

DOTM = Department of Transport Management, DSC = design and supervision consultant, KMC = Kathmandu Metropolitan City, MOE= Ministry of Environment,
PIU = project implementation unit, PMCO = project management and coordination office, PMCB = project management and capacity building consultant, TP =
Traffic Policy.
 3

B. Overall Project Implementation Plan

CCTV = closed circuit television, DOR = Department of Roads, DOTM = Department of Transport Management, DSC = design and
supervision consultant, KMC = Kathmandu Metropolitan City, PD = project director, PM = project manager, PIU = project implementation
office, PMCB = project management and capacity building consultant, PMCO = project management and coordination office, TDF = Town
Development Fund.
4

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities

• MPPW - EA
(PMCO) ¾ Guides, supervises, manages and monitors overall
project implementation.
¾ Acts as the secretariat of the IC/ PSC and implements
key policy level decisions provided by the HLPCC to
facilitate project implementation.
¾ Provides guidance to and monitors project
implementation by the implementing agencies.
¾ Reviews designs and all reports prepared by the IAs,
and prepares all reports to internal and external
agencies, such as ADB.
¾ Liaises with all concerned Ministries and stakeholders,
¾ Coordinates all project activities.
¾ Engages PMCBC consultants.
¾ Prepares disbursement projects and withdrawal
applications for submission to ADB.
¾ Requests budgetary allocation for counterparts.
¾ Ensures and monitors compliance with loan covenants
and ADB Safeguard Policy.
• DOTM, DOR, KMC, MOE, and MTPD – IA's
(PIUs) ¾ Implement Project components under their jurisdiction
(DOR and KMC - design and construction; MOE and
MTPD - equipment purchase and installation; DOTM -
design and implementation of PT components).
¾ Engage and design and supervision consultants.
¾ Liaise / coordinate with PSC, PMCO and stakeholders.
¾ Manage the bidding process for civil works or
equipment contracts, with support from PMCO, sign
and administer the contract.
¾ Work under the guidance of and provide all necessary
information to PMCO.
¾ Submit audited project account annually to PMCO
within 6 months of the end of the fiscal year.
¾ Submit supporting documents for withdrawal
applications to PMCO (check against LA/RRP).
¾ Take responsibility for O&M of infrastructure and
equipment.
• HLPCC
(NPC, MPPW, MOLTM, ¾ Provide policy direction and inter-ministerial
MLD, MOH, MOE, MOF, coordination.
and DOTM) ¾ Reviews overall progress of the Project.
• IC/PSC
(KMC, MPPW, MOE, ¾ Guide and monitors overall project implementation.
MOLTM, MLD, DOR, DOTM, ¾ Implement policy decisions provided by the HLPCC.
KVTDC, FNNTE, PMCO) ¾ Ensure inter-agency coordination and resolve project
implementation issues.
 5

• ADB
¾ Supervise the overall project implementation.
¾ Reviews and issues no-objection to procurement and
disbursement documents.
ADB = Asian Development Bank, IC = implementation committee, DOR = Department of Roads, DOTM = Department of Traffic
Management, EA = executing agency, FNNTE = Federation of Nepalese National Transport Entrepreneurs, HLPCC = High Level Policy
and Coordination Committee, IA = implementing agency, KMC = Kathmandu Metropolitan City, KVTDC = Kathmandu Valley Town
Development Committee, MOE = Ministry of Environment, MOF = Ministry of Finance, MOH = Ministry of Home, MLD = Ministry of
Local Development, MOLTM = Ministry of Labor and Transport Management, MPPW = Ministry of Physical Planning and Works, NPC =
National Planning Commission, O&M = operation & maintenance, PSC = project steering committee, PMCO = project management and
coordination office

B. Key Persons Involved in Implementation

Executing Agency
MPPW Officer's Name: Mr. Purna Kadariya
Position: Secretary
Telephone
Email address
Office Address

ADB
Division Director Staff Name: M. Teresa Kho
Position: Director, SAUD
Telephone No.: +632 632 6858
Email address: mtkho@adb.org
Mission Leader Staff Name: David Margonsztern
Position: Urban Development Specialist (Transport)
Telephone No.: +632 632 57 87
Email address: dmargonsztern@adb.org
6

C. Project Organization Structure

High Level Policy

Coordination Committee

Ministry of Physical
Planning and Work
Implementation
EA
Committee/
Project Steering
Project Management and
Committee
Coordination Office
(Secretariat of PSC)
Except for DOR, IAs and PIUs are not
under the direct authority of the EA.
MPPW/PMCO will coordinate them to
implement Project activities.

Project Implementation
Units at KMC, DoTM,
DOR, MTPD, and MOE
(IAs)

EA = executing agency, DOR = Department of Roads, DOTM = Department of Traffic Management, IA = implementing
agency, KMC = Kathmandu Metropolitan City, MOE = Ministry of Environment, MPPW = Ministry of Physical Planning and
Works, MTPD = Metropolitan Traffic Police Division, PMCO = project management and coordination office, PSC = project
steering committee
 7

IV. COSTS AND FINANCING

The project is estimated to cost $30.42 million, including taxes and duties of about $3.8 million
to be financed by the Government. The total cost includes physical and price contingencies, and
interest charges during implementation. Detailed cost estimates by expenditure category and
detailed cost estimates by financier are in Section C of this document. The investment plan is
summarized in Table 1.

Table 1: Project Investment Plan

($ million)
Item Amounta
b
A. Base Cost
1. Public Transport Improvement 7.69
2. Traffic Management Improvement 12.27
3. Pedestrianization 4.99
4. Air Quality Improvement 0.34
5. Project management and capacity building 2.12
Subtotal (A) 27.41

B. Contingenciesc 2.92

C. Financing Charges During Implementationd 0.09

Total (A+B+C) 30.42
a
Includes taxes and duties of $3.8 million to be financed from government resources.
b
In mid-2010 prices.
c
Physical contingencies computed at 10% for civil works and equipment.. Price contingencies computed at 0.0-
1.5% on foreign exchange costs and 5.0-8.0% on local currency costs; includes provision for potential exchange
rate fluctuation under the assumption of a purchasing power parity exchange rate.
d
Interest during construction for ADB loan has been computed at the rate of 1.0%.
Source: Asian Development Bank estimates

The government has requested a loan in various currencies equivalent to SDR6.886 million, and
a grant not exceeding $10 million, from ADB’s Special Funds resources, to help finance the
project. The loan will have a 32-year term, including a grace period of 8 years, an interest
charge of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such
other terms and conditions set forth in the draft financing agreement.

ADB financing of $20 million, or 66% of the total project cost, will be used to finance (i) part of
the civil works; (ii) equipment; (iii) consulting services; (iv) part of the implementation of the pilot
bus routes; (v) part of the recurrent costs; (vi) training and capacity building; (vii) awareness
campaigns; and (viii) interest charges during implementation. Government and KMC financing
of $7.9 million, or 26% of the total project cost, will be used for land acquisition and
resettlement, taxes and duties, part of project management, and part of the civil works.

The Global Environmental Facility (GEF) grant cofinancing of $2.52 million, or about 8% of the
total project cost, will be used to finance part of the public transport component, related to
climate change and air pollution mitigation measures (loan to purchase electric, or other low
emission vehicles in replacement of diesel microbuses on the pilot bus routes, and a feasibility
study for the reintroduction of trolleybuses). ADB typically seeks approval from its Board of
Directors for the administration of grant funds from co-financers only when cofinancing
commitments are in place. In the case of the proposed GEF grant funding, the submission of the
GEF Endorsement Document is planned in July 2010. To facilitate project implementation, the
Board is requested to approve administration of the proposed grant, in an amount not exceeding
8

$2.8 million (including the 10% ADB administration fee), which is expected to be confirmed
subsequent to Board approval. Approval of the GEF grant will be reported to the Board by
standard reporting procedures. If GEF does not approve grant financing, the portion to be
financed by GEF grant will not be financed under the project. Alternatively, the government may
make arrangements, satisfactory to ADB, to cover the funding shortfall. The financing plan is in
Table 2.

Table 2: Financing Plan

Amount Share of
Source ($ million) Total (%)
Asian Development Bank 20.00 65.75
GEFa 2.52 8.28
Government 7.90 25.97
Total 30.42 100.00
a
Global Environmental Facility
Source: ADB estimates
 9

A. Detailed Cost Estimates by Expenditure Category

(Rupees Million) (US$ '000)

Local Foreign Total Local Foreign Total
I. Investment Costs
A. Land Acquisition and Resettlement
1. Land Acquisition and Resettlement 157.4 - 157.4 2,155.7 - 2,155.7
B. Civil Works
1. Civil Works 644.0 260.4 904.3 8,821.3 3,566.8 12,388.1
C. Vehicles and Equipment
1. PMCO Vehicle 0.6 4.4 4.9 7.8 60.0 67.8
2. CCTV Equipment 20.7 49.0 69.7 283.7 671.6 955.3
3. Intelligent Transport System and Automated Ticketing System 38.8 - 38.8 532.0 - 532.0
4. PMCO and PIU Equipment and Furniture 3.5 1.5 4.9 47.8 20.0 67.8
5. Traffic Equipment for Police 9.0 13.9 22.9 123.6 190.7 314.4
6. Traffic Signals 17.9 23.1 41.0 245.9 316.1 562.0
7. Air Quality Monitoring Equipment 8.3 5.0 13.3 113.0 68.6 181.6
Subtotal Vehicles and Equipment 98.8 96.9 195.7 1,353.8 1,327.0 2,680.9
D. Consultant Services
1. Technical (International) 16.3 130.5 146.7 222.8 1,787.3 2,010.1
2. Technical (National) 167.5 - 167.5 2,294.1 - 2,294.1
Subtotal Consultant Services 183.7 130.5 314.2 2,516.9 1,787.3 4,304.2
E. TDF (Grants to Purchase Electric Vehicles)
1. Grant/Loan to Purchase Electric Vehicles - 277.4 277.4 - 3,800.0 3,800.0
F. Training and Capacity Building
1. Overseas - 5.1 5.1 - 70.0 70.0
2. In Country Training 18.0 - 18.0 246.4 - 246.4
Subtotal Training and Capacity Building 18.0 5.1 23.1 246.4 70.0 316.4
G. Studies and Surveys
1. Studies and Surveys 39.6 23.9 63.5 542.1 328.0 870.1
H. Advocacy
1. Awareness Campaign 13.6 - 13.6 186.1 - 186.1
I. Project Management
1. PMCO and PIU Staff 31.1 - 31.1 425.4 - 425.4
2. PMCO and PIU Operating Cost 19.6 - 19.6 269.1 - 269.1
Subtotal Project Management 50.7 - 50.7 694.4 - 694.4
J. Lease of Land for Terminals
1. Land lease for DOTM's Terminals 1.2 - 1.2 16.4 - 16.4
Total BASELINE COSTS 1,206.9 794.2 2,001.1 16,533.2 10,879.0 27,412.2
Physical Contingencies 74.3 35.7 110.0 1,017.5 489.4 1,506.9
Price Contingencies 100.9 2.3 103.1 1,381.9 30.9 1,412.9
Total PROJECT COSTS 1,382.1 832.2 2,214.2 18,932.6 11,399.3 30,332.0
Interest During Implementation 6.4 - 6.4 88.0 - 88.0
Total Costs to be Financed 1,388.5 832.2 2,220.7 19,020.7 11,399.3 30,420.0

9
10

B. Allocation and Withdrawal of Loan and Grant Proceeds

Unless specifically stated otherwise, the following are applicable to both the Loan and Grant
proceeds:

(i) Percentages of ADB Financing. Except as ADB may otherwise agree, each item
of expenditure shall be financed out of the proceeds of the Loan and Grant on the
basis of the percentages set forth in the tables attached to Schedule 3 to the
financing agreement.

(ii) Interest Charge. The amount allocated to category 3 in the table 3A attached to
Schedule 3 to the financing loan agreement (and in this document, below), is for
financing the interest charge on the Loan during the implementation period of the
Project.

(iii) Reallocation. Notwithstanding the allocation of Loan and grant proceeds and the
withdrawal percentages set forth in the tables,

(a) if the amount of the Loan and Grant allocated to any category appears to
be insufficient to finance all agreed expenditures in that category, ADB
may, in consultation with the Government, (i) reallocate to such category, to
the extent required to meet the estimated shortfall, amounts of the loan
which have been allocated to another category but, in the opinion of ADB,
are not needed to meet other expenditures, and (ii) if such reallocation
cannot fully meet the estimated shortfall, reduce the withdrawal percentage
applicable to such expenditures in order that further withdrawals under such
category may continue until all expenditures thereunder will have been
made; and

(b) if the amount of the loan and grant allocated to any category appears to
exceed all agreed expenditures in that category, ADB may, in consultation
with the Borrower, reallocate such excess amount to any other Category.

WITHDRAWAL OF LOAN PROCEEDS

(Kathmandu Sustainable Urban Transport Project)
CATEGORY ADB FINANCING

Amount Allocated Percentage and

Number Item SDR Basis for Withdrawal
Category from the Loan Account

1 Works 5,782,000 68 percent of total expenditure claimed

2 Vehicle and Equipment 386,000 21 percent of total expenditure claimed

3 Interest Charge 61,000 100 percent of amount due

4 Unallocated 657,000

Total 6,886,000
 11

ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS

(Kathmandu Sustainable Urban Transport Project)
CATEGORY ADB FINANCING

Amount
Percentage and
Allocated
Number Item Basis for Withdrawal
$
from the Grant Account
Category

1 Vehicles & Equipment 1,375,000 51 percent of total expenditure claimed

2 Consulting Services 3,823,300 89 percent of total expenditure claimed

TDF (Grants to purchase

Electric or low emission
3 Vehicles & Equipments) 1,800,000 47 percent of total expenditure claimed

4 Training & Capacity Building 316,400 100 percent of total expenditure claimed*

5 Studies and surveys 342,000 39 percent of total expenditure claimed

6 Advocacy 186,100 100 percent of total expenditure claimed*

7 Project Management 175,200 65 percent of total expenditure claimed

8 Lease of land for Terminals 16,400 100 percent of total expenditure claimed*

9 Unallocated 1,965,600

Total 10,000,000
* Exclusive of taxes and duties imposed within the territory of the Beneficiary
 12
C. Detailed Cost Estimates by Financier

ADB Loan b ADB Grant b GEFa Government

% of Cost % of Cost % of Cost % of Cost Total
Amount d Category Amount d Category Amount Category Amount Category
A. Land Acquisition and Resettlement 2,155.7 100.0 2,155.7
B. Civil Works 8,397.8 67.8 - - - - 3,990.3 32.2 12,388.1
C. Vehicles and Equipment 560.0 20.9 1,375.0 51.3 - - 745.8 27.8 2,680.8
D. Consultant Services
1. Technical (International) - - 1,787.3 88.9 - - 222.8 11.1 2,010.1
2. Technical (National) - - 2,036.0 88.7 - - 258.1 11.3 2,294.1
Subtotal Consultant Services - - 3,823.3 88.8 - - 480.9 11.2 4,304.2
E. TDF (Grants to Purchase Electric Vehicles and Equipment) - - 1,800.0 47.4 2,000.0 52.6 - 3,800.0
F. Training and Capacity Building
1. Overseas - - 70.0 100.0 - 70.0
2. In Country Training - - 246.4 100.0 - 246.4
Subtotal Training and Capacity Building - - 316.4 100.0 - 316.4
G. Studies and Surveys - - 342.0 39.3 520.0 59.8 8.1 0.9 870.1
H. Advocacy - - 186.1 100.0 186.1
I. Project Management
1. PMCO and PIU Staff - - - - - - 425.4 100.0 425.4
2. PMCO and PIU Operating Cost - - 175.2 65.1 - - 93.8 34.9 269.0
Subtotal Project Management - - 175.2 25.2 - - 519.2 74.8 694.4
J. Lease of Land for Terminals - - 16.4 100.0 - - 16.4
Total BASELINE COSTS 8,957.8 32.7 8,034.4 29.3 2,520.0 9.2 7,900.0 28.8 27,412.2
Physical Contingencies 492.4 32.7 1,014.5 67.3 - - 1,506.9
Price Contingencies 461.8 32.7 951.1 67.3 - - 1,412.9
Interest During Implementation d 88.0 100.0 - - - - 88.0
Total Costs to be Financed c 10,000.0 32.87 10,000.0 32.87 2,520.0 8.28 7,900.0 25.97 30,420.0
a
Global Environmental Fund
b
Amount of ADB loan and grant proceeds allocated to the cost category.
c
The amounts disbursed by ADB for eligible expenditures under a cost category will be subject to the ceiling set by the allocation of loan proceeds for such cost category.
d
Bank charges will be financed from the fund source.
Source: Asian Development Bank estimates.
D. Detailed Cost Estimates by Outputs/Components

Capacity
Public Traffic Building
Transport Management Actions in Air and Physical
Network Measures Favor of Quality Project Contingencies
Improved Strengthened Pedestrians Improved Management Total % Amount
I. Investment Costs /a
A. Land Acquisition and Resettlement - 2,155.7 - - - 2,155.7 - -
B. Civil Works 1,251.7 6,626.0 4,510.3 - - 12,388.1 10.0 1,238.8
C. Vehicles and Equipment 532.0 1,831.6 - 181.6 135.6 2,680.9 10.0 268.1
D. Consultant Services
1. Technical (International) 1,051.3 830.0 - 73.4 55.3 2,010.1 - -
2. Technical (National) 450.9 740.4 403.4 50.4 649.1 2,294.1 - -
Subtotal Consultant Services 1,502.2 1,570.3 403.4 123.8 704.4 4,304.2 - -
E. TDF (Grants to Purchase Electric Vehicles) 3,800.0 - - - - 3,800.0 - -
F. Training and Capacity Building
1. Overseas - - - - 70.0 70.0 - -
2. In Country Training - - - - 246.4 246.4 - -
Subtotal Training and Capacity Building - - - - 316.4 316.4 - -
G. Studies and Surveys 570.0 50.0 30.0 - 220.1 870.1 - -
H. Advocacy 20.0 30.0 50.0 32.9 53.2 186.1 - -
I. Project Management
1. PMCO and PIU Staff - - - - 425.4 425.4 - -
2. PMCO and PIU Operating Cost - - - - 269.1 269.1 - -
Subtotal Project Management - - - - 694.4 694.4 - -
J. Lease of Land for Terminals
1. Land lease for DOTM's Terminals 16.4 - - - - 16.4 - -
Total BASELINE COSTS /b 7,692.3 12,263.8 4,993.7 338.3 2,124.1 27,412.2 5.5 1,506.9
Physical Contingencies /c 178.4 845.8 451.0 18.2 13.6 1,506.9 - -
Price Contingencies /d 186.5 615.1 492.2 9.6 109.4 1,412.9 7.5 106.1
Interest During Implementation /e 23.4 39.8 17.2 1.1 6.5 88.0
Total PROJECT COSTS 8,080.6 13,764.5 5,954.2 367.2 2,253.5 30,420.0
a
Includes taxes and duties of $3.8 million to be financed from government resources.
b
In mid-2010 prices.
c
Physical contingencies computed at 10% for civil works and equipment.
d
Price contingencies computed at 0.0-1.5% on foreign exchange costs and 5.0-8.0% on local currency costs; includes provision for potential exchange rate fluctuation under the
the assumption of a purchasing power parity exchange rate
e
Interest during construction for ADB loan has been computed at the rate of 1.0%.
Source: Asian Development Bank estimates

13
 14
E. Detailed Cost Estimates by Year

Base Cost Foreign Exchange

2010 2011 2012 2013 Total % Amount
I. Investment Costs
A. Land Acquisition and Resettlement
1. Land Acquisition and Resettlement 1,077.9 1,077.9 - - 2,155.7 - -
B. Civil Works
1. Civil Works - 6,888.5 4,629.2 870.4 12,388.1 28.8 3,566.8
C. Vehicles and Equipment
1. PMCO Vehicle 67.8 - - - 67.8 88.5 60.0
2. CCTV Equipment - 955.3 - - 955.3 70.3 671.6
3. Intelligent Transport System and Automated Ticketing System - 532.0 - - 532.0 - -
4. PMCO and PIU Equipment and Furniture 67.8 - - - 67.8 29.5 20.0
5. Traffic Equipment for Police - 314.4 - - 314.4 60.7 190.7
6. Traffic Signals - 562.0 - - 562.0 56.3 316.1
7. Air Quality Monitoring Equipment - 115.0 66.6 - 181.6 37.8 68.6
Subtotal Vehicles and Equipment 135.6 2,478.7 66.6 - 2,680.9 49.5 1,327.0
D. Consultant Services
1. Technical (International) 1,180.1 498.0 332.0 - 2,010.1 88.9 1,787.3
2. Technical (National) 886.4 971.5 369.8 66.4 2,294.1 - -
Subtotal Consultant Services 2,066.5 1,469.4 701.8 66.4 4,304.2 41.5 1,787.3
E. TDF (Grants to Purchase Electric Vehicles)
1. Grant/Loan to Purchase Electric Vehicles - 3,800.0 - - 3,800.0 100.0 3,800.0
F. Training and Capacity Building
1. Overseas 35.0 35.0 - - 70.0 100.0 70.0
2. In Country Training 61.6 61.6 61.6 61.6 246.4 - -
Subtotal Training and Capacity Building 96.6 96.6 61.6 61.6 316.4 22.1 70.0
G. Studies and Surveys
1. Studies and Surveys 735.0 60.0 25.0 50.0 870.1 37.7 328.0
H. Advocacy
1. Awareness Campaign 123.8 23.8 22.8 15.8 186.1 - -
I. Project Management
1. PMCO and PIU Staff 106.3 106.3 106.3 106.3 425.4 - -
2. PMCO and PIU Operating Cost 67.3 67.3 67.3 67.3 269.1 - -
Subtotal Project Management 173.6 173.6 173.6 173.6 694.4 - -
J. Lease of Land for Terminals
1. Land lease for DOTM's Terminals - 16.4 - - 16.4 - -
Total BASELINE COSTS 4,409.0 16,084.9 5,680.6 1,237.8 27,412.2 39.7 10,879.0
Physical Contingencies 13.6 936.7 469.6 87.0 1,506.9 32.5 489.4
Price Contingencies 46.1 679.7 497.1 190.0 1,412.9 2.2 30.9
Interest During Implementation 13.0 51.4 19.3 4.4 88.0
Total PROJECT COSTS 4,481.6 17,752.6 6,666.6 1,519.2\ 30,420.0
 15

F. Contract and Disbursement S-curve

G. Fund Flow Diagram

The following diagrams show how the funds will flow from ADB and the MOF to implement
project activities

ADB

(v)
MOF (District
Treasurer Office)
(iv) (x)
Fund Flow (viii)
Document Flow (ix)
Trimestrial budget

MPPW, PMCO
release

(3 imprest accounts)
PMCO project account
(iii)
(vii)
(i)
Governement IAs / PIUs
counterpart (ii) (5 PIUs project accounts)

(xi)
(vi)
(xi)

Consulting services
and Contractors > Contractors < $100,000
$100,000, and TDF and other expenses

ADB = Asian Development Bank, IA = implementing agency, MOF = Ministry of Finance, MPPW = Ministry of Physical Planning and
Works, PMCO = project management and coordination office, PIU = project implementation unit, TDF = Town Development Fund.
16

For Direct Payment to Contractors and Consultant

(i) Contractors and consultant issue claims to PIUs/PMCO
(ii) PIU/PMCO check the claims and make payment (Gov't counterpart)
(iii) PIU sends contractor's/consultant's invoices to PMCO for direct payment from ADB
and other evidence of payment of government counter to PMCO
(iv) PMCO send request to ADB for direct payments together with contractors' and
consultants' invoices
(v) ADB makes direct payment to contractor and consultant
For Other Expenditures
(vi) Contractors < $100,000 issue claims to PIUs/PMCO
(vii) PIU sends expenditure statement to PMCO including contractor's value below
$100,000
(viii) PMCO consolidates statement of expenditures and request ADB for replenishment
(ix) Consolidated expenditure statement from PMCO to MOF (District Treasury Office)
on monthly basis
(x) ADB makes replenishment to imprest account
(xi) PIUs/PMCO makes payment

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

Financial management assessments (FMAs) indicated that the financial management practices
in the executing agency and implementing agencies are generally sound, except for DOTM and
KMC whose financial management capacities have been assessed to be weak (including a lack
of experience with donor funded project). Nevertheless, the FMA did identify some
shortcomings: (i) financial management systems in the executing agency (EA) and
implementing agencies (IAs) need to be streamlined and modernized, incorporating a results or
performance-based orientation to planning, budgeting, monitoring and control; (ii) effective
financial performance monitoring system is required to measure the impact and utilization of
funds; (iii) financial management operational procedures manual are inadequate; (iv) asset
recording and safeguards need to be improved; (v) the financial units in the IAs need to be
expanded, with clearly defined duties, responsibilities, lines of supervision and limits of
authority; and (vi) a computerized financial management reporting system is required for
improved efficiency. Assessment of the financial condition of the IAs has shown that these
agencies are financially sound, with the exception of KMC.

To alleviate these shortcomings, financial management specialists in PMCO will build capacity
within MPPW, DOR, KMC, DOTM, MOE and MTPD in financial planning (including tariff
setting), accounting, reporting, auditing and control. The consultants will assist the IAs in
strengthening and modernizing their financial management systems, develop and install a
performance-based planning and budgeting system under the project, enhance the
computerized financial management system, and support these IAs to use the national financial
system designed by MOF. The consultants will also ensure that the Financial Management
Information System (FMIS) developed and installed at the PMCO and PIUs is integrated with
the IA’s systems. For KMC, the specialists will assist in strengthening their revenue generation
capacity.

Financial management risks should be considered and updated throughout the life of the
project. Risk mitigation measures should also be updated accordingly.
 17

More details on Financial Management Assessment for IAs and Town Development Fund (TDF)
is available in Annex E.

B. Disbursement

The Loan and Grant proceeds including ADB administered co-financier funds will be disbursed
in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to
time),1 and detailed arrangements agreed upon between the Government and ADB.

Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),2 ADB funds may not be applied to
the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5
of the SPS. All financial institutions will ensure that their investments are in compliance with
applicable national laws and regulations and will apply the prohibited investment activities list
(Appendix 5) to subprojects financed by ADB.

The following financing and disbursement arrangements can be used under the project.3

• Direct payment procedure – where ADB, at the Government's request, pays a designated
beneficiary directly.4
• Commitment procedure – where ADB, at the Government's request, provides an irrevocable
undertaking to reimburse a commercial bank for payments made or to be made to a supplier
agains a Letter of Credit (LC) financed from the loan account.5
• Reimbursement procedure – where ADB pays from the loan to the Government's account or,
in some cases, to the project account for eligible expenditures which have been incurred and
paid for by the project out of its budget allocation or its own resources.6
• Imprest fund procedure – where ADB makes an advance disbursement from the loan account
for deposit to an imprest account to be used exclusively for ADB's share of eligible
expenditures.7

The Government will, immediately after loan and grant effectiveness, establish three imprest
accounts at the Nepal Rastra Bank. The currency of the imprest accounts will be [Dollar], to be
managed by MPPW. The imprest accounts ceiling will not exceed the lower of (i) the estimated
expenditure to be financed from the imprest account for the first 6 months of Project
implementation, or (ii) the equivalent of 10% of the Loan amount. The PMCO and each of the
PIUs will each open a project account at a commercial bank acceptable to ADB. The request for
intial advance to the imprest account should be accompanied by an Estimate of Expenditure
Sheet8 setting out the estimated expenditures for the first 6 months of project implementation,
and submission of evidence satisfactory to ADB that the imprest account has been opened. For
every liquidation and replenishment request of the imprest account, the Government will furnish
to ADB (a) Statement of Account (bank statement) where the imprest account is maintained,
and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned
bank statement against the EA's records.9

1
Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf
2
Available at http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf
3
Available at http://www.adb.org/documents/handbooks/loan_disbursement/chap-06.pdf
4
Available at http://www.adb.org/documents/handbooks/loan_disbursement/chap-07.pdf
5
Available at http://www.adb.org/documents/handbooks/loan_disbursement/chap-08.pdf
6
Available at http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf
7
Available at http://www.adb.org/documents/handbooks/loan_disbursement/chap-10.pdf
8
Available in Appendix 29 of the Loan Disbursement Handbook.
9
Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.
18

The statement of expenditure (SOE) procedure will be adopted to reimburse eligible

expenditures or liquidate advances provided into the imprest account. Any individual payment to
be reimbursed or liquidated under SOE procedure will not exceed the equivalent of $100,000.
SOE records should be maintained and made readily available for review by ADB's
disbursement and review mission or upon ADB's request for submission of supporting
documents on a sampling basis, and for independent audit.10

Payments for contractors (above $100,000), and consultant invoices contracted by PMCO and
PIUs will be paid directly by ADB which requires PMCO submission and PIUs submission,
through PMCO, of approved invoices and documentation to ADB in accordance with ADB's
Loan Disbursement Handbook. The grant money for the pilot bus routes to be managed by TDF
will also be directly disbursed from ADB to TDF account.

Before the submission of the first withdrawal application, the Government 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 amount per withdrawal application is US$100,000, unless otherwise
approved by ADB. The Government is to consolidate claims to meet this limit for reimbursement
and imprest account claims. Withdrawal applications and supporting documents will
demonstrate, among other things that the goods, and/or services were produced in or from ADB
members, and are eligible for ADB financing.

For the disbursement and liquidation procedures for Government funds, refer to the fund flow
diagram and its legend, in Section IV.

C. Accounting

The MPPW and each of the IAs, and the TDF, will maintain separate project accounts and
records by funding source for all expenditures incurred on the Project. Project accounts will
follow international accounting principles and practices or those prescribed by the Government's
accounting laws and regulations.

D. Auditing

The MPPW, through the PMCO, will cause the detailed consolidated project accounts to be
audited in accordance with International Standards on Auditing and/or in accordance with the
Government's audit regulations by an independent auditor acceptable to ADB. The audited
accounts will be submitted in English language to ADB within 6 months of the end of the fiscal
year by MPPW. The annual audit report will include a separate audit opinion on the use of the
imprest accounts and the SOE procedures (as applicable). The Government and MPPW have
been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory
and acceptable quality of the audited accounts. 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. For revenue generating projects only, ADB requires audited financial
statements (AFS) for each executing and/or implementation agency associated with the project.

10
Checklist for SOE procedures and formats are available at:
http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls
 19

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

The Government has requested ADB's approval of advance contracting for the recruitment of
Consultants.

All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines
(February 2007, as amended from time to time) (ADB’s Procurement Guidelines)11 and ADB’s
Guidelines on the Use of Consultants (2007, as amended from time to time) (ADB’s Guidelines
on the Use of Consultants).12 The issuance of invitations to bid under advance contracting will
be subject to ADB approval. The Government, MPPW and each of the IAs have been advised
that approval of advance contracting does not commit ADB to finance the Project.

B. Procurement of Goods, Works and Consulting Services

All procurement of goods and works will be undertaken in accordance with ADB’s Procurement
Guidelines.

International competitive bidding procedures will be used for works contracts estimated to cost
$1 million or more, and supply contracts valued at $500,000 or higher. National competitive
bidding procedures will be used for works contracts estimated to cost between $100,000 and $1
million and for supply contracts valued between $100,000 to $500,000. Shopping will be used
for contracts for procurement of works and equipment worth less than $100,000.

Before any procurement processing, ADB and the Government will review the public
procurement laws of the Government to ensure consistency with ADB’s Procurement
Guidelines.

An 18-month procurement plan indicating threshold and review procedures, goods, works and
consulting service contract packages and national competitive bidding guidelines is in Section C
All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants.13 The
terms of reference for all consulting services are detailed in Section D.

An estimated 466 person-months (73 international, 393 national) of consulting services will be
provided to (i) facilitate project management and implementation including overall monitoring
and evaluation of the Project at the PMCO; (ii) assist DOR, KMC, and DOTM in carrying out
detailed design and construction supervision of their respective components, including
monitoring for safeguards compliance; (iii) carry out preliminary design of the trolley bus system;
and (iv) provide capacity building of the IAs, strategic planning, pilot implementation of the
public transport network, and institutional development support of the DOTM. Consulting firms
will be engaged using the quality- and cost-based selection (QCBS) method with a standard
quality:cost ratio of 80:20.

C. Procurement Plan

See Annex B.
11
Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Proccurement.pdf
12
Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf
13
Checklists for actions required to contract consultants by method available in e-Handbook on Project
Implementation at: http://www.adb.org/documents/handbooks/project-implementation/
20

D. Consultant's Terms of Reference

Outline terms of reference for all consulting services are shown in Annexes Annexes C to E

VII. SAFEGUARDS

1. Environmental Safeguards. An Environmental Management Plan (EMP) has been

prepared for the Project as part of the Initial Environmental Examination (IEE) report. The
following are institutional roles and responsibilities to ensure that the EMP is implemented
during design and construction stages:

PMCO. The PMCO, with assistance from the project management consultant is to (i) confirm
Environmental Impact Assessment (EIA) or IEE, including EMP, is undertaken or updated
based on detailed designs in accordance with the Government rules and ADB's policy
requirements; (ii) confirm whether EMP is included in bidding documents and civil works
contracts; (iii) provide oversight on environmental management aspects of the Project and
ensure EMP is implemented by IAs, DSCs, and contractors; (iv) establish a system to monitor
environmental safeguards of the project including monitoring the indicators set out in the
monitoring plan of the EMP; (v) facilitate and confirm overall compliance with all Government
rules and regulations; (vi) review, monitor and evaluate the effectiveness with which the EMP is
implemented, and recommend necessary corrective actions to be taken as necessary; (vii)
consolidate quarterly environmental monitoring reports from IAs and submit annual monitoring
reports to ADB; and (viii) ensure timely disclosure of the final EIA, IEE including EMP in
locations and form accessible to the public.

Implementing Agencies. Two IAs, namely DOR and KMC, with the assistance of design and
supervision consultants, are to: (i) undertake or update an EIA/IEE including EMP during
detailed design stage and have them approved by concerned authorities; (ii) ensure EMP is
included in bidding documents and civil works contracts; (iii) ensure compliance with all
Government rules and regulations; (iv) oversee implementation of EMP including environmental
mitigation measures and monitoring by contractors; (v) take corrective actions when necessary
to ensure no environmental impacts; and (vi) submit quarterly environmental monitoring reports
to the PMCO. In DOR, its Geo-Environment and Social Unit (GESU) is responsible for ensuring
environmental safeguards compliance.

2. Social Safeguards (Involuntary Resettlement). A draft Resettlement Plan (RP) has

been prepared for the Project. Land acquisition and involuntary resettlement impacts are limited
to one subcomponent only, i.e., junction improvements along the BLR. The cost related to land
acquisition and resettlement/rehabilitation will be borne by the Government. The PMCO is to
ensure that affected persons (APs) are compensated prior to land acquisition and
commencement of civil works. The following are institutional roles and responsibilities to ensure
the RP is implemented during design and construction stages:

PMCO. The PMCO is to (i) conduct internal monitoring of resettlement process to ensure
smooth implementation; (ii) ensure the IA (DOR) with assistance from DSC update and finalize
the draft RP during the detailed design stage; (iii) ensure timely payments of compensation and
other entitlements as per the final RP and made before land acquisition and commencement of
civil works; (iv) ensure ongoing consultations with communities and affected persons; and (v)
submit semiannual monitoring reports to ADB that describe the progress of the implementation
of resettlement activities and any compliance issues and corrective actions.
 21

Implementing Agencies. DOR, through its GESU and with assistance from DSC, will: (i)
ensure the draft RP is updated based on detailed design; (ii) engage in ongoing meaningful
consultations with stakeholders and affected persons; (iii) implement the final resettlement plan;
(iv) provide timely payments to affected persons before land acquisition and commencement of
civil works; (v) facilitate the provision of training and capacity building activities to APs; (vi)
ensure all grievances are addressed and coordinate with the Grievance Redress Committee;
(vii) take corrective actions where necessary; and (viii) submit quarterly monitoring reports to
PMCO and clearly communicate the implementation status of RP and the status of APs
throughout the project period.

Civil Works Contracts. The Government will ensure that civil works contracts and bidding
documents under the Project include specific provisions requiring contractors to comply with all
(a) applicable labor laws and core labor standards on (x) prohibition of child labor as defined in
national legislation for construction and maintenance activities, on (y) equal pay for equal work
of equal value regardless of gender, ethnicity or caste, and on (z) elimination of forced labor,
and (b) the requirement to disseminate information on sexually transmitted diseases including
HIV/AIDS to employees and local communities surrounding the Project sites.

In addition, under the two pilot bus routes subcomponent, the Project will construct foursmall
bus terminals, which locations in the periphery of Kathmandu have not been determined yet.
The pilot routes and the terminals will be implemented and constructed following a feasibility
studies to be carried out by DoTM, with the help of the PMCO consultants, during the first year
of Project implementation. It is unlikely that land acquisition will be needed as the land for the
terminals is proposed to be leased from government, private sector or individuals. However, a
RF has been prepared in case any land acquisition is identified during implementation and in
the feasibility study. In such unlikely event, the following steps will be taken: (i) assessment to
find out whether any type of displacement – physical or economic or both – will take place
because of the project; (ii) formulation of RP in accordance with the RF, in consultation with
affected peoples and other stakeholders and approval of it by ADB and disclosure; and (iii)
implementation of RP. The construction activities may proceed, only after these requirements
are met. No vulnerable and marginalized indigenous people will be affected by the Project.

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. Project Design and Monitoring Framework

See Annex F.

B. Monitoring

1. Project performance monitoring. The PMCO will establish a project performance

management system using the targets, indicators, assumptions, and risks in the DMF. The
baseline data for output and outcome indicators will be gathered during the detailed design
stage, within 9 months of loan effectiveness, disaggregated by income levels, sex, caste, and
ethnicity. After the initial baseline survey, the PMCO will conduct annual monitoring using the
same indicators and submit quaterly reports to ADB throughout project implementation. Results
of a comprehensive completion survey will be included in the project completion report. These
quarterly reports will provide information necessary to update ADB's project performance
22

reporting system.14

2. Compliance monitoring. Status of compliance with loan covenants—policy, legal,

financial, economic, environmental, and others— will be reviewed at each ADB review mission.
All non-compliance issues, if any, will be updated in quarterly progress reports together with
remedial actions.

3. Safeguards monitoring. Status of the implementation of the EMP and EARF, and
resettlement plan and resettlement framework will be discussed at each ADB review mission
and integrated into quarterly progress reports.

4. Poverty and Social, and Gender action plans. Status of the implementation will be
discussed at each ADB review mission and integrated into quarterly progress reports15.

C. Evaluation

The Government and ADB will jointly review the Project at least twice a year. This includes (i)
the performance of the PMCO, PIUs, TDF, consultants, and contractors; (ii) physical progress of
works and equipment installation, and effectiveness of capacity building support; (iii) compliance
with loan assurances; and (iv) assessment of project component sustainability in technical and
financial terms. In addition to the regular reviews, the Government and ADB will undertake a
comprehensive midterm review at the end of the second year of Project implementation to
identify problems and constraints encountered and suggest measures to address them. Specific
items to be reviewed will include (i) appropriateness of scope, design, implementation
arrangements, and schedule of activities; (ii) assessment of implementation pace against
project indicators; (iii) effectiveness of capacity building support; (iv) compliance with safeguard
measures; (v) lessons learned, good practices, and potential for replication; and (vi) changes
recommended. Within 6 months of physical completion of the Project, MPPW will submit a
project completion report to ADB.16

D. Reporting

MPPW will provide ADB with (i) quarterly progress reports in a format consistent with ADB's
project performance reporting system; (ii) consolidated annual reports including (a) progress
achieved by output as measured through the indicator's performance targets, (b) key
implementation issues and solutions; (c) updated procurement plan and (d) updated
implementation plan for next 12 months; and (iii) a project completion report within 6 months of
physical completion of the Project. To ensure projects continue to be both viable and
sustainable, project accounts and the executing agency AFSs, together with the associated
auditor's report, should be adequately reviewed. Project Implementing Units will provide PMCO
with monthly progress reports and monthly expenditure reports within 7 days of the following
month using the standard format prepared by PMCO.

14
ADB's project performance reporting system is available at:
http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool
15
Staff Guide to Consultation and Participation: http://www.adb.org/participation/toolkit-staff-guide.asp and CSO
Sourcebook: A Staff Guide to Cooperation with Civil Society Organizations:
http://www.adb.org/Documents/Books/CSO-Staff-Guide/default.asp
16
Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-
Sector-Landscape.rar
 23

E. Stakeholder Communication Strategy

The vision for sustainable urban transport will be communicated to residents by various media
(newspaper articles, TV video clips, radio, advertising hoardings) as part of a communication
plan to be managed by the PMCO with the support of the capacity development consultants.

In a similar manner, IAs have funds allocated to carry out their own communication strategies.
The Traffic Police will focus on improved driving behavior, linked to the introduction of a
Highway Code, better enforcement, demonstration junctions and more rigorous driving tests.
The DoTM will conduct campaigns to promote public transport, linked to the introduction of the
two pilot routes. The MOE will disseminate air quality readings from its monitoring stations to
make the public aware of the health implications of traffic emissions and to educate drivers to
take more care of the environment through selection of low or zero emission vehicles or
improved vehicle maintenance.

KMC will conduct pedestrianization in close collaboration with those residents directly affected
in both the Historic Core and the Central Area. In both cases the works will be determined by
the outcome of local area improvement programs that will involve intense community
participation. Improvements to the pedestrian environment within the central area will be one
third financed from occupiers of properties fronting the sidewalks. Improvements within the
Historic Core will be carried out in conjunction with other infrastructure improvements identified
by residents. Other improvements will be partly financed by user group contributions in
accordance with the normal KMC procedures for ward level projects.

These lines of communication will commence at the start of the project and continue as and
when necessary throughout the 4 year project period.

IX. ANTICORRUPTION POLICY

ADB reserves the right to investigate, directly or through its agents, any violations of the
Anticorruption Policy relating to the Project.17 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.
Individuals/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.18

To support these efforts, relevant provisions are included in the loan agreements, regulations
and the bidding documents for the Project.

The Project incorporates other measures, in addition to the standard ADB requirements, to
deter corruption and increase transparency. The Project will (i) build the EA and the IAs'
capacity to comply with ADB and Government procedures; and (ii) establish a project website to
disclose information about project implementation. The project website will provide updated,
detailed information on project implementation. For example, it will include procurement-related
information, such as the list of participating bidders, name of the winning bidder, basic details on
bidding procedures adopted, amount of contract awarded, and the list of goods and/or services
procured. The Project website will be established by MPPW within [6] months of the loan and
grant effectiveness, with the help of the PMCO consultants.

17
Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf
18
ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp
24

X. ACCOUNTABILITY MECHANISM

People who are, or may in the future be, adversely affected by the project may address
complaints to ADB, or request the review of ADB's compliance under the Accountability
Mechanism.19

The Project will establish a grievance redress mechanism to ensure greater accountability. With
the assistance of the PMCO consultants, MPPW will set up the grievance redress mechanism
within 6 months of the loan and grant effectiveness, to receive and resolve complaints, as well
as to act upon stakeholders’ reports of irregularities on project related matters, including
grievances concerning resettlement. The EA will widely publicize the existence of this
mechanism to ensure that stakeholders are aware that a venue is available to address concerns
or grievances relating to fraud, corruption, abuse, and any other aspects of project
implementation.

XI. RECORD OF PAM CHANGES

The first draft of PAM has been prepared and agreed upon at the loan fact-finding.

19
For further information see: http://compliance.adb.org/.