AUDIT REPORT - LOCAL WATER PROJECT

Evaluates the period 5/1/74-12/31/76 and was based on an audit review of project documents, interviews with project personnel, and site visits. The report also reviews a related water project (PD-AAF-874-B1). Project successes include the strengthened institutional capacity of the Government of the Philippines" (GOP) then newly created agency, the Local Water Utilities Authority (LWUA). LWUA has expanded to 530 employees and 118 water districts; 95 of which have received an official conditional certificate of conformance, while certification of the other 23 is pending. LWUA"s feasibility studies and project design engineering are also considered very professional. A total of five provincial water systems were constructed for the cities of Bacolod, Cagayan de Oro, Davao, San Pablo, and Tacloban, thus realizing the project"s other objective. In addition, most water system materials are now produced in the Philippines, reflecting an expansion of the country"s manufacturing base and an increase in employment. The major project shortfall was an 18-month delay in project implementation. This delay was partially due to LWUA"s inability to deal effectively with local cultural and social attitudes regarding the higher cost of potable water over cheaper, but unsafe, water sources and the reluctance of the water districts" managers to incur a necessary long-term debt to LWUA. Operational problems also contributed to the unexpected delay. There were difficulties in identifying potential construction contractors and in clearing project commodities through customs. Furthermore, the GOP required extended periods of time (up to three months) to approve construction contracts. USAID files lacked many of the project activity progress and evaluation reports required of LUWA, the outside consultant, and USAID. This absence of records made it difficult to assess the factors that were responsible for the 18-month delay. As this project is complete, there are no recommendations.