Aceh ROAD BETTERMENT PROJECT (LOAN 497-T-036)

AUDIT COVERS THE PERIOD 3/1/76-7/31/79. EVALUATION METHODOLOGY IS NOT INDICATED. VARIOUS SECTORS HAVE HINDERED COMPLETION OF THE PROJECT WHICH IS CURRENTLY ONLY 25% COMPLETE AND WHOSE COMPLETION MAY EXTEND TO 1982. THE PROJECT DESIGN ASSUMED THE EXISTENCE OF QUALIFIED INDIGENOUS CONTRACTORS, WHICH PROVED NOT TO BE THE CASE. THE VALIDITY OF SUCH ASSUMPTIONS SHOULD BE TESTED MORE THOROUGHLY IN THE FUTURE. THE THREE INDONESIAN ENGINEERING FIRMS, SELECTED TO CONSTRUCT THREE SECTIONS OF ROAD, GENERALLY WERE NOT MANAGED, STAFFED, EQUIPPED, TRAINED, OR FINANCED ADEQUATELY. CONSTRUCTION EFFORTS WERE FURTHER LIMITED BY INADEQUATE ROAD SURVEY AND ALIGNMENT DESIGN, USE OF COSTLY TIMBER (INSTEAD OF CONCRETE) FOR BRIDGE CONSTRUCTION, AND LACK OF OPERABLE EQUIPMENT AT ALL WORK SITES. PROJECT EXPERIENCE INDICATED A NEED FOR EXPATRIATE EXPERTS TO CONDUCT ADDITIONAL SURVEYS AND DESIGNS, PREVENT THE RECURRENCE OF COSTLY MISTAKES, AND REINFORCE INDIGENOUS CAPABILITIES. ALL PARTIES CONCERNED AGREE THAT THIS REQUIREMENT SHOULD BE FULFILLED. BINA MARGA, HOWEVER, HAS CONTINUED TO OPERATE WITHOUT SUCH ADDITIONAL ASSISTANCE. IT IS RECOMMENDED THAT BINA MARGA DO SO. IN RESPONSE TO PROVIDING EFFECTIVE, OPERABLE EQUIPMENT, USAID AND BINA MARGA AGREE THAT THREE EQUIPMENT SPECIALISTS ARE NEEDED, BUT BINA MARGA HAS RECRUITED NONE. AUDITOR RECOMMENDS THAT USAID CONTINUE TO ASSIST IN RECRUITING A QUALIFIED SPECIALIST FOR EACH SECTION OF ROAD BEING CONSTRUCTED. ONLY TWO REQUESTS FOR REIMBURSEMENT FROM GOI HAVE BEEN PROCESSED SINCE PROJECT INCEPTION, RESULTING IN A LACK OF CONTRACTOR OPERATING FUNDS. BECAUSE THE REIMBURSEMENT CYCLE IS NOW BEING REGULARIZED, THE AUDITOR MAKES NO RECOMMENDATION. HOWEVER, RECOMMENDATIONS ARE MADE THAT ALL PARTIES MEET TO BE CERTAIN OF THEIR RESPECTIVE ROLES IN COMPLETING THE PROJECT IN A TIMELY MANNER AND TO ENSURE OVERRUN FUNDING.