Project : Aceh road betterment

Only 126 km of the total of 318 km targeted were completed. A.I.D. funding for Section I, Tapaktuan to Kruengluas, was withdrawn following a price dispute between Bina Marga, the Government of Indonesia's (GOI) road agency, and the original contractor, and funding was withdrawn for Section III, Kutacane to Blangkejeren, after 28% completion because Bina Marga reduced design standards to an unacceptable level. Funding for Section II, Kruengluas to Sidikalang, was terminated 5/31/82 after 91.08% completion. Laudably however, the GOI has or is in the process of completing the project as designed with its own funds, despite a 150% increase in total costs. Technical assistance contracts were terminated at the same time construction funding was cut off, following the training of only one resident engineer and the partial training of three engineers at Bina Marga. More positively, the project resulted in the evolvement of two first class highway contractors now working successfully elsewhere in Indonesia without expatriate help. Although lack of a baseline study will make it impossible to quantify the project's benefits, visible increases can be seen in the building of new homes, commercial enterprises, and farm structures, and in farm commodity traffic on the roads. The project taught that it is extremely difficult and time-consuming to make construction contractors out of building contractors; it took 2 full years to gear up to begin road building, and another 5 years to build 212 km of road. Contributing factors were the area's remoteness, bad weather, lack of skilled personnel, low wages, and insufficient funding. In regard to the latter, the project taught that a conventional FAR (Fixed Amount Reimbursement) agreement based on the completion of self-sustaining subprojects is not a satisfactory method of disbursing A.I.D. loan funds for a roadbuilding project. No such subprojects were produced during the project's first 3 years, so no loan funds were disbursed. Even after the disbursement method was tied to contractor invoices, a total of $642,000 had to be deobligated.