LUWU AREA AND TRANSMIGRATION DEVELOPMENT PROJECT; LOAN NO. 497-T-038; PROJECT 497-0244; USAID/INDONESIA

PROJECT PROVIDES LOAN TO DEVELOP THE LUWU DISTRICT OF SOUTH SULAWESI FOR THE USE OF TRANSMIGRANTS OF OTHER SETTLERS. AUDITORS REVIEWED PROJECT DOCUMENTATION, INTERVIEWED USAID AND GOI PERSONNEL, AND OBSERVED ON-SITE ACTIVITIES. IMPLEMENTATION PROBLEMS HAVE RESULTED IN EXTENDED DELAYS. PROJECT DESIGN PROVIDED INSUFFICIENT COORDINATION AND AUTHORITY AMONGST THE NUMEROUS IMPLEMENTING AGENCIES. THE ROAD SUBPROJECT, PLANNED FOR COMPLETION BY 1978, IS JUST GETTING UNDER WAY. NEW TARGET DATE IS 1983. USE TO LOCAL INDONESIAN CONTRACTORS HAS CONTRIBUTED TO DELAY. ORIGINAL ROAD DESIGN WORK WAS FOUND TO BE GROSSLY IN ERROR AND REQUIRED REDESIGN. CONSTRUCTION CONTRACTORS ARE INEXPERIENCED. US ENGINEERING CONSULTANTS, SUBCONTRACTED BY AN INDONESIAN FIRM, HAVE NOT BEEN UTILIZED EFFICIENTLY. IN ADDITION, THE LACK OF BRIDGE DESIGNS AND INSUFFUCUENT CONSTRUCTION SUPERVISION ALSO CONTRIBUTE TO DELAYS. AUDITORS NOTE THAT THE ORIGINAL DECISION TO USE LOCAL CONTRACTORS WAS INTENDED TO PROVIDE THEM WITH EXPERIENCE IN ROAD CONSTRUCTION. TO EXPEDITE ROAD CONSTRUCTION, AUDITORS RECOMMEND THAT BINA MARGA (THE GOI DEPARTMENT OF HIGHWAYS) ADVISE THE CONSTRUCTION CONTRACTOR TO QUICKLY COMPLETE HOUSING FACILITIES FOR ON-SITE EXPATRIATE PERSONNEL; ENSURE THAT AVAILABLE EQUIPMENT IS SUITABLE TO NEEDS; FINALIZE BRIDGE DESIGNS; AND ADVISE CONSTRUCTION CONTRACTORS TO MAINTAIN A PROJECT MANAGER ON SITE. TWO IRRIGATION SYSTEMS WERE TO BE REHABILITATED AND EXTENDED BY 1979. NEW TARGET DATE IS 1983. ONLY 28% OF THE WORK HAS BEEN CONTRACTED. CONTRIBUTORY PROBLEMS ARE (1) POOR SURVEY AND DESIGN WORK, (2) INADEQUATE QUALITY CONTROL ON CONSTRUCTION, (3) UNAVAILABILITY OF LOCAL CONSTRUCTION CONTRACTORS, AND (4) 1ACK OF AN OPERATION AND MAINTENANCE PLAN. COMPLETION OF 4 FARM SERVICE CENTERS HAS BEEN DELAYED FROM 10/78 TO 1/81 DUE TO POOR COORDINATION, CONSTRUCTION NOT IN ACCORDANCE WITH AID CRITERIA, AND BUDGETARY LIMITATIONS. FINANCIAL MANAGEMENT OF THE LOAN SHOULD BE IMPROVED. ISOLATION OF REIMBURSABLE EXPENDITURES HAS NOT BEEN ACCOMPLISHED.