Audit of USAID/Guatemala"s road and bridge repair activities

Audit report covers the period 5/99-9/00. CHF has subcontracted with the Asociacion para el Mantenamiento Vial de Ixcan (AMVI) to rehabilitate 100 km of road on the Franja Transversal del Norte highway and is on schedule to complete 50 km of roads in the first year of the project. CHF has also completed construction on one bridge and is on schedule to complete five bridges during the first year of the agreement. All 15 planned bridge projects are scheduled to be completed by 6/01, and all CHF construction projects should be completed by 9/30/01 within the amount currently budgeted. ANACAFE, on the other hand, cannot achieve planned outputs within the current budget. With reconstruction costs double those originally proposed, ANACAFE to date has subcontracted for rehabilitation of only 60.7 km of the target of 130 km of roads. Further, ANACAFE has not developed a firm plan of action to complete the remaining 69.3 km. Based on the price of the roads already contracted, only 76 km of the 130 km can be constructed with available funding -- 58% of the target. The Mission has monitored the road and bridge repair activities, but could have done so more closely in some areas. The cost estimates for road construction in the ANACAFE proposal, which were not realistic, were not subjected to a detailed cost analysis by the Mission. A closer review of the proposed costs would have revealed that the construction of 130 km of roads was not feasible given the project"s road specifications and the mountainous terrain in which the construction was to take place. At the audit"s entrance conference, Mission officials were not aware of the significant funding shortfall. Nor had they been informed that two of the ANACAFE roads had to be rerouted due to local opposition to widening roads in areas where coffee plants and other crops had been planted on a portion of the right-of- way. Finally, the Mission has taken no action to date to require ANACAFE to produce a firm plan of action to address the above- mentioned funding shortfalls. In addition, under the CHF agreement, the original work plan included the construction of 12 concrete bridges and one Bailey bridge, and the repair of one Bailey bridge. However, CHF later decided not to build four of the concrete bridges because they were not considered as critical as other sites. In their place they identified five other sites where bridges will be built at approximately the same cost. However, CHF did not inform the Mission of these significant changes to the work plan. Mission officials stated that since it was not a contract, but rather a cooperative agreement, they did not think they needed to approve this type of change. However, the substantial involvement clause of the cooperative agreement includes a provision for approval of the work plan. USAID/Guatemala agreed with the audit"s findings and plans to implement the recommendation made to address the identified problems.