Learning Curves

OED
July 2007

BuildingLinkstoProsperity: RoadsandRailwaysinthePRC
In1992,thePRChadthelowestroaddensityintheworldrelativetoareaorpopulation.Its railwayswereexperiencingseverecapacitybottlenecks. Between1997and2005,theroadnetworkofthePRCgrewfrom1.23millionkmto1.93 millionkm.Thisinvolvedconstructionofanationaltrunkhighwaysystemandanarterial roadnetworkcomposedmainlyofexpressways.Therailwaynetworkgrewfrom65,970km to75,438km,whilecapacitywasaugmentedbydoubletrackingandelectrification. Investmentinbothtransportmodesfeaturedmoderntechnologies,projectmanagement methods,andsteadyreformofsubsectorpoliciesandinstitutionalarrangementsincluding greatercommercialorientationandnewapproachestocostrecovery. Roadsandrailwaysabsorbed27ofthe58ADBloanstothePRCapprovedin19972005.
Background Theperiod19972005isofdeepsignificancefor roadsandrailwaysinthePeoplesRepublicofChina (PRC).Itbeganwithplansforsustainedinfrastructure investmentstoaddresswellknownblockages.Butthe 1997EastAsianfinancialcrisisthatstruckinJulyset offprofoundchanges.Facedwithapossibledownturn ineconomicgrowth,theGovernmentdecidedto pumpprimetheeconomybyincreasinginvestmentin publicworks,especiallythoselinkedtothehighway system.Byprovidingdevelopmentfinanceand consistentsupportandadvicethroughout,theAsian DevelopmentBank(ADB)actedasatrusted developmentpartnerataturningpointinthehistory ofthePRC.In2006,theOperationsEvaluation DepartmentundertookaSectorAssistanceProgram EvaluationofAsianDevelopmentBankAssistancefor RoadsandRailwaysinthePeoplesRepublicofChina tohelpprepareADBsnextcountrypartnership strategyforthePRCin2007. 1 Itfedthecountry assistanceprogramevaluationforthePRCconducted atthesametimewiththesameintent. Thestudylookedintostrategicdirection,program alignmentandperformance,ADBinfluenceand performance,andlessonsofexperience.Its methodologyincludedaretrospectivesituationanalysis
Operations Evaluation Department Asian Development Bank

oftheroadsandrailways,acomparatorassessmentof otherdonorassistance,ananalysisofstrategicfit, evaluationsofcompletedADBprojects,studiesof povertyreductionimpactsofroadsandrailways, assessmentsoftheperformanceofADBtechnical assistance,asurveyofADBperformanceandclient orientation,andacomparisonofprojectswithand withoutADBassistance. Thestudyframedanalysesastopdownand bottomupassessments.Thefirstintegratedstrategic positioning,performanceandclientorientation,and contributiontodevelopmentresults.Thesecond consideredtherelevance,effectiveness,efficiency, sustainability,andimpactoflendingoperationsin roadsandrailwaysapprovedin19972005andrapidly assessedongoingprojects.Thebottomupassessment alsoreviewedtechnicalassistancetoroadsand railwaysapprovedovertheperiod. SummaryofFindings Combiningtopdownandbottomupassessments, thestudyratedADBssectorassistanceassuccessful overall.Strategicpositioninginbothsubsectorswas ratedhigh.Performanceandclientorientationwere deemedtohavebeensubstantialinbothcases. Contributiontodevelopmentresultswasjudged significanttomoderate:intheearlystages,valueadded

6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444; evaluation@adb.org; www.adb.org/evaluation/

wasverysignificantinmobilizationoffinance, incorporationofstandardprovisionstostrengthen subsectorgovernance,andintroductionofmarket basedprinciples,approachestopublichealth,and povertyimpactmonitoring.However,valueadded declinedasnationalandprovincialgovernmentsbuilt suchfeaturesintheirownprojects. WithADBshelp,roadsandrailwaysinthePRC underwentaremarkabletransformationover1997 2005bothintermsofnetworkexpansionand upgrading,andthroughmodernizationandreformof policiesandinstitutions.TheGovernmentsprograms inthetwosubsectorswerewellconceived,andthere werebothstrongcommitmentandcapacitytocarry themout.Byprovidingdevelopmentfinancefromthe onset,andconsistentassistanceandadvice,especially intheroadsubsector,ADBplayedavaluablerolein realizingaccomplishments.AnimportantpartofADBs approachwastheconstancyofitshelpovertheyears. However,bytheendoftheperiodwiththenational trunkhighwaysystemnearingcompletionandthe railwaysnetworkhavinggrownincapabilityand sophisticationtobecomeworthyofcomparisonagainst internationalstandardsthischapterinADBssupport tothesubsectorswasnearingitsconclusion.Thestudy showedthat,withexceptions,thestandardpackageof ADBassistanceandmostspecialprojectfeatureswere bythennolongeraddingmuchvaluerelativeto domesticallyfinancedinvestments.IfADBcontinuesto backroadsandrailwaysinthePRC,itmustidentify areasthatofferscopeforvalueaddition.Itmustthen adjustthetypesofactivitiesthatitsupports,thewayit providesassistance,andtheneededADBstaffskills. Recommendations Formulatenewfocusandprioritiesforlending assistancetotheroadsandrailwaystakinginto accounttheGovernmentsprioritiesandADB experienceandresources.Indoingso,(i)pursue policydialoguetoidentifyareasforstrategicfocus andvalueaddition;and(ii)adoptproject componentsandspecialfeaturesappropriateto projectlocationandrelatedpriorities. Enhancetheperformanceoftechnicalassistanceto roadsandrailwaysby(i)rationalizingresource allocationforprojectpreparatorytechnical assistanceinrelationtoestimatedrequirementsand localconditions;(ii)adoptingalongerterm

engagementandincreasingallocationforadvisory technicalassistancetoprovidestateoftheart knowledgeproductsandservices;(iii)makinguseof moreinputsfromhighqualitynationalconsultants; (iv)bringinginworldclassandPRCexperienced internationalconsultants;and(v)providing necessarystaffandincentivesforexcellencein projectdesignandsupervision. Increaseresponsivenesstoclientconcernsby(i) pursuingfurtherdiscussionwiththeGovernmentto explorehowtomakeuseofADBsnewlending productsandmodalities;(ii)simplifyingbusiness procedurestoreducetransactioncostsassociated withADBsprojectprocessingandadministration procedures;(iii)pilotingcountrysystemsfor environmentalsafeguardcompliancewherecapacity isevident,andassistinginstrengtheningthatin othersafeguardareas;(iv)attachinglocalroads,link roads,anddetailedpovertymonitoringframeworks toexpresswayprojectsstrictlyonademanddriven basisandinlinewithADBsenhancedpoverty reductionstrategy;(v)furtherstrengtheningthe PRCResidentMissionwithatransportsector specialistanddelegatingtoitmoreprojectrelated workandresponsibilityforadvisoryservicesto clients;and(vi)matchingADBstaffingtothefocal areasinwhichADBcancontinuetoaddvalueto roadsandrailwaysinthePRC. Feedback ADBManagementsResponseconsideredthestudy atimelyandvaluableinputtowardthenewcountry partnershipstrategy.ADBsManagementagreedin generalwiththethrustofthefindingsand recommendationsandwasencouragedthatthereport byandlargeconfirmedtheimportanceofseveral ongoingADBwidereforminitiatives.Thekeyfindings andrecommendationsofthestudyfedthe DevelopmentEffectivenessCommitteesreviewofthe countryassistanceprogramevaluationforthePRC, summedupintherelatedChairsSummaryofthe DevelopmentEffectivenessCommitteeDiscussions. 1 ADB.2007.SectorAssistanceProgramEvaluationofAsian
DevelopmentBankAssistanceforRoadsandRailwaysinthe PeoplesRepublicofChina.Manila.Available: http://www.adb.org/Documents/Reports/SAPE/PRC/SAP PRC200704.pdf

Learning Curves available @ www.adb.org/evaluation/

Team Leader: Tyrrell Duncan; Tel +63 2 632 4133; evaluation@adb.org