IMPLEMENTATION COMPLETION REPORT - World Bankdocuments.worldbank.org/curated/en/872861468299057105/pdf/mul… · Report No.: 18004 IMPLEMENTATION COMPLETION REPORT PHILIPPINES FIRST

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The World Bank

FOR OFFICIAL USE ONLY

Report No.: 18004

IMPLEMENTATION COMPLETION REPORT

PHILIPPINES

FIRST WATER SUPPLY, SEWERAGE AND SANITATIONSECTOR PROJECT

(LOAN 3242-PH)

June 15, 1998

Rural Development and Natural Resources UnitEast Asia and Pacific Region

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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CURRENCY EQUIVALENTS(Peso per US$)

Year Exchange Rate

1990 (Appraisal fear) P 22.501997 (Completio l Year) P 40.12 (12/29/97)

WEIGHTS AND MEASURES

I liter (I) = 1.1 quarts (qt) or 0.26 gallons (gal1 liter per capita per day (Ipcd) = 0.2642 gal per capita per day

FISCAL YEAR

January 1 to December 31

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankBWSA Barangay Waterworks and Sanitation AssociationCOA Commission on AuditDBM Department of Budget and ManagementDECS Department of Education, Culture and SportsDEO District Engineering OfficeDILG Department of Interior and Local GovernmentDOH Department of HealthL)PWH Department of Public Works and HighwaysEACPF East Asia Country Philippines Field OfficeEAP East Asia and PacificEASRD East Asia Sector Rural DevelopmentFW4SP First Water Supply, Sewerage and Sanitation Sector ProjectICR Implementation Completion ReportJICA Japan International Cooperation AgencyLCB Local Competitive BiddingLGU Local Government UnitLWUA Local Water Utilities AdministrationNEDA National Economic and Development AuthorityNGA National Government AgenciesNGO Non-governmental OrganizationsOECF Overseas Economic Cooperation FundO&M Operation and MaiptenanceSAR Staff Appraisal ReportUNDP/WB United Nations Development Program/World Bank

Managers and Staff Responsible

Vice Presldent Mr. Jean-Michel SeverinoDirector Mr. Vinay K. BhargavaSector Manager Geoffrey B. FoxTask Manager Mr. Wael Zakout

FOR OFFICLAL USE ONLY

TABLE OF CONTENTS

PREFACE

EVALUATION SUMMARYProject Objectives .................................................... iImplementation Experience and Results .......................................... ........... iSummary of Findings, Future Operations and Key Lessons Learned .......................... ii

PART 1: PROJECT IMPLEMENTATION ASSESSMENTA. Project Objectives ..................................................... 1B. Achievement of Objectives ..................................................... 2C. Major Factors Affecting the Project ..................................................... 5D. Project Sustainability ..................................................... 7E. Bank Performance .................................................... 7F. Borrower Performance ..................................................... 8G. Assessment of Outcome ..................................................... 9H. Future Operation ..................................................... 9I. Key Lessons Learned .................................................... 10

PART II: STATISTICAL TABLESTable 1: Summary of Assessment .13Table 2: Related Bank Loans .14Table 3: Project Timetable .15Table 4: Loan Disbursements: Cumulative Estimated and Actual .15Table 5: Key Indicators for Project Implementation .16Table 6: Key Indicators for Project Operation .23Table 7: Studies Included in the Project .26Table 8A: Project Costs. ............................................ 27Table 8B: Project Financing ............................................ 28Table 9: Economic Costs and Benefits ................ ............................ 28Table 10: Status of Legal Covenants ............................................ 30Table 11: Compliance with Operational Manual Statements ............................ ..... 32Table 12: Bank Resources: Staff Inputs ............................................ 32Table 13: Bank Resources: Missions ............................................ 33

APPENDICESA: Mission's Aide-MemoireB: Borrower Contribution to the ICRC: Consultant Contribution to the ICRD: Map of the Philippines

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

PHILIPPINES

FIRST WATER SUPPLY, SEWERAGE AND SANITATION SECTOR PROJECT(LOAN 3242-PH)

PREFACE

This is the Implementation Completion Report (ICR) for the First Water Supply, Sewerageand Sanitation Sector Project (FW4SP) in the Philippines, for which the Loan 3242-PH in an amountequivalent to US$85 million was approved on July 9, 1990 and made effective on January 15, 1991.A restructuring of the loan resulting in a decrease in the amount of the loan to the equivalent ofUS$58 million was requested by the Government of the Philippines on June 17, 1993 and agreed bythe Bank on November 12, 1993. Another US$10.07 million was canceled in FY96 bringing the finalamount of the loan to US$47.93 million. The loan was closed on December 31, 1997, twenty fourmonths after the original closing date of December 31, 1995. Final disbursement took place on May18, 1998 at which time a balance of US$3.23 million was canceled.

The ICR was prepared by Mary Judd of the Social Development Unit in the East Asia and thePacific Region with the help of Steven Matsler, Water Supply Consultant. Contributions came fromCecilia Vales of the Resident Mission in the Philippines, Nancy Barrett of the Rural Developmentand Natural Resources Sector in EAP, and Loreta Rufo, Financial Analyst Consultant. It wasreviewed by Vinay Bhargava (Country Director, EACPF), Geoffrey Fox (Manager, EASRD), JeffreyGutman (EASTR), Wael Zakout (EASRD) and Erdogan Pancaroglu (former Task Manager). TheGovernment and Project Consultant provided their reports and comments that are included asappendices to the ICR.

Preparation of this ICR was begun during the Bank's final supervision and completionmissions from September 29-October 6 and October 6-22, 1997 respectively. The report is based onmaterial in the project file which includes the Staff Appraisal Report (No. 8143-PH) dated May 31,1990; the Loan Agreement dated July 9, 1990; Bank supervision reports; and project implementationprogress reports. It is also based on discussions with implementing and relevant agencies, donororganizations, non-governmental organizations and participating private sector companies as well asfield visits to project sites and a series of consultative meetings in regions, provinces, municipalitiesand barangays.

A major part of the report is based on information gathered in a participatory manner and thefindings and recommendations are as much contribution from the Bank as from the majorstakeholders including the beneficiaries and local government units. The Bank thanks theGovernment, the project implementation team of DILG, DPWH and DOH and the project consultantsfor their valuable assistance in preparing this ICR.

EVALUATION SUMMARY


PHILIPPINES

Introduction

1. In 1987, about 37% (21.2 million) of the Philippines' population had no access to safe waterand the 1980 census indicated that 44% of the population had no satisfactory sanitation facilities. In1987, the Government of the Philippines prepared the Water Supply, Sewerage and Sanitation MasterPlan of the Philippines 1988-2000 (Master Plan), which placed particular emphasis on accelerateddevelopment of the sector in the rural areas. The First Water Supply, Sewerage and Sanitation SectorProject (FW4SP), the subject of this report, was designed to support the Master Plan by providingbasic water supply facilities in 37 provinces within 7 regions on the island of Luzon, and sanitationfacilities in 75 provinces within 14 regions nationwide.

Project Objectives

2 The principal objective of the FW4SP was to assist the Government to meet the basic needsof the rural population through the provision of safe, adequate and easily accessible water supplies, aswell as proper sanitation. Secondary objectives included decentralization of Government activities,training of manpower, and a range of social, environmental, and private sector developmentobjectives (e.g., poverty alleviation, women's participation, improved environmental sanitation, andpromotion of local manufacture).

Implementation Experience and Results

3. Rural water activities under FW4SP were administered by the Department of Public Worksand Highways (DPWH), rural sanitation activities were administered by the Department of Health(DOH), and complementary training activities in community development were administered by theDepartment of Interior and Local Government (DILG). Although the Loan Agreement was signed inJuly of 1990 and the project formally started in late 1991, a substantial level of physical projectactivity was not achieved prior to 1992. Because of this long delay, in 1993 the project wasrestructured and the loan reduced from the equivalent of $85 million to the equivalent of $58 million;in the restructuring, the total number of project targets was reduced by roughly 40%. Later, anotherUS$10.07 million was cancelled bringing the final amount of the loan to US$47.93 million. Theoriginal Loan Closing Date of December 31, 1995 was also eventually extended (to December 31,1997), to enhance achievement of project objectives.

4. By the extended Loan Closing Date, the project achieved most of its revised physical targets.For water supply, 100% of the revised targets were met. For sanitation, 100% of the productiontargets were met prior to the extended Loan Closing Date; 70% of the toilet bowls were installed andthe remainder to be installed under the Government's sanitation program for 1998. Related

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community development activities (i.e., formation of Barangay Waterworks and SanitationAssociations, or BWSAs) were also 100% completed. Given the long initial delays incommencement of meaningful project implementation, the performance of the three implementingagencies is considered satisfactory.

5. Project planning and coordination were affected by several factors. The "top down"approach taken (i.e., utilizing preparation of Provincial Master Plans) to identifying project locations,and slow obtainment of grant funding for this activity, appears to have limited Plan usefulness inassisting the three involved Government agencies to develop their detailed implementation programs.Poor coordination between the three implementing agencies also caused difficulties, especially inearly part of the project phase, in particular between the DILG and the DPWH, resulting both inmismatches between targets for community development activities versus construction of watersupply facilities, and in the out-of-sequence occurrence of these activities.

6. Some problems were observed with procurement of materials, quality control of facilityconstruction, and long-term maintenance of a substantial proportion of the project facilities. Theproject's household latrine subcomponent was long-delayed in awarding contracts for themanufacture of plastic toilet bowls, and then further delayed by quality-control problems with theinitial batches produced. Project wells, which were originally intended to be mainly constructedunder contract by professional well drillers, instead were usually constructed by small, poorlyequipped and trained "backyard well drillers", which is felt to have had a particularly adverse effecton the quality of project deep wells. A substantial number of the BWSAs formed under the projectwere not active and the affected facilities were then maintained by either the barangay council orprivate individuals.

7. Achievement of the project's secondary objectives was affected by Government attitudestowards both decentralization and private sector development. The enactment of the LocalGovernment Code of the Philippines in 1992 served to substantially promote project-relatedresponsibilities at the Local Government level, particularly with respect to the sanitation component.On the other hand, lack of Government willingness or ability to provide financial support for trainingof private sector participants (particularly well drillers) resulted in lower quality of facilitiesconstructed, although private sector manufacturing capabilities (particularly with respect to deep wellhandpumps) appear to have been very well promoted.

Summary of Findings, Future Operations and Key Lessons Learned

8. The concept of the project was sound, and the project outcome (as stated in the 1990 SAR)was considered satisfactory, as substantial physical accomplishment of the restructured water supplyand sanitation targets was achieved. The sustainability of the full range of constructed andfunctioning physical infrastructure will be achieved only if the users and their organizations(BWSAs, Barangay Councils, Municipal Government, schools, and private sector groups) are activein operation and maintenance. The findings and the observations of the ICR mission in its limitedsampling found that more than half of these groups were not active. The project's CapacityEnhancement Program managed by DILG and implemented by an NGO was a relatively successfulattempt to provide the necessary support to enhance sustainability of facilities and organizations.However, due to time constraint this program was focused on only one out of three batches ofcommunities. The operations phase plan for the FW4SP, presented in Part II (Table 6B), emphasizesactivities which are intended to provide support to more communities served under the project.

9. The principal lessons learned are summarized as follows:

Principles/Design

a) Multi-agency type of projects should be avoided; where National Government Agencies areinvolved, it is recommended that a single agency serve as the executing agency;

b) Projects should support decentralization where projects are planned and implemented by theLocal Government Units (LGU), National Govermment Agencies (NGA) can provide theexecuting agency role, Provincial Government can assist with technical assistance, supervisionand monitoring, and the Municipality and Barangay should be the focus of implementation;

c) Cost recovery principles should be promoted and implementing agencies, i.e., LGUs, shouldborrow funds for investments and be fully accountable for them;

d) Small civil works contracts, such as those under this Project, should be undertaken by LGUs;procurement of all goods can also be handled by LGUs; certain items (e.g., deep well handpumpsand plastic toilet bowls) can be procured at the central level to achieve economies of scale and tomaintain quality;

Preparation

e) All Government agencies with both direct and peripheral responsibility to the project should beinvolved from the earliest stages of project preparation;

f) At the beginning of project preparation an institutional assessment should be conducted for thecapability and experience of the LGUs. Appropriate and more intensive technical assistanceshould be provided to the weaker LGUs;

g) Planning, designing and implementation of sub-projects by LGUs should be based on need anddemand and in close consultation and participation with the community;

Implementation

h) A supporting environment which will enable LGUs to succeed should be promoted, e.g., simplifyprocedures, establish mechanisms which will speed implementation, allow procurement byLGUs, develop a proper system of accounting and financial reporting;

i) The first year of project implementation should include the preparation of a comprehensiveproject implementation plan with sub-project proposals from the community, prior to the start ofconstruction;

j) Continue to support local private sector manufacturing capability and promote private sectorparticipation in O&M;

k) Where appropriate and where skills are available, LGUs should work with NGOs for communityorganizing as well as contractors in the small physical works; the cooperation betweenintermediary and local government would require clear definition of roles and responsibilities inall phases of the project and after;

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1) Utilization of pre-existing community organizations for the operation and maintenance of Level I(point source) water supply facilities should be considered in future project designs; more formalassociations such as BWSAs should be promoted only for higher level (Levels II and III)facilities;

Supervision

m) Full supervision missions should visit the project at frequent intervals in the initial stages of theproject, and at other critical periods, with particular emphasis on adherence to financial andprocurement policy;

n) Strong and appropriate action, such as suspension of disbursements, should be taken in light ofdelayed audits; and

o) The World Bank supervision mission should include a procurement staff from the ResidentMission to undertake field reviews of accounting procedures and physical facilities, at leastannually.


PHILIPPINESFIRST WATER SUPPLY, SEWERAGE AND SANITATION SECTOR PROJECT

(LOAN 3242-PH)

PART 1: PROJECT IMPLEMENTATION ASSESSMENTA. PROJECT OBJECTIVES

Sectoral Background

1. By 1987, about 63% of the Philippines' population had access to safe water. The populationunserved by water supply systems, comprising approximately 21.2 million people (primarily rural ) atthe end of 1987, depended on water of often doubtful quality from wells, springs, rainwater, lakes,streams and vendors. Likewise, the 1980 census of the Philippines indicated that only about 56% ofthe population had access to satisfactory sanitation facilities. Of the 17.3 million people stillunderserved or unserved countrywide, 12.6 million were in the rural areas.

2. In 1987, the Government prepared the Water Supply, Sewerage and Sanitation Master Planof the Philippines 1988-2000 (Master Plan), which placed particular emphasis on accelerateddevelopment of the sector in the rural areas. The First Water Supply, Sewerage and Sanitation SectorProject (FW4SP), the subject of this report, was designed to support the Master Plan by providingbasic water supply facilities in 37 provinces within 7 regions on the island of Luzon, and sanitationfacilities in 75 provinces within 14 regions nationwide. It succeeded another Bank-financed ruralwater supply and sanitation project in the Philippines which was underway at the time of preparationof the Master Plan (Rural Water Supply and Sanitation Project, Loan 2206-PH), and wasimplemented concurrently with other projects which include similar components, including the RuralWater Supply IV Project (OECF), and the UNDP/WB-PHI Project. Similar projects which haverecently started or are expected to commence soon include the Rural Environmental SanitationProject (JICA) and Rural Water Supply and Sanitation Sector Project (ADB).

3. Rural water activities under FW4SP were administered by the Department of Public Worksand Highways (DPWH), rural sanitation activities were administered by the Department of Health(DOH), and complementary training activities in community development were administered by theDepartment of the Interior and Local Government (DILG).

Project Objectives

4. Principal Objective. The principal objective of the FW4SP was to assist the Government tomeet the basic needs of the rural population through the provision of safe, adequate and easilyaccessible water supplies, as well as proper sanitation. Specifically, the project aimed at: (a)providing Level I (point source) rural water supply facilities, including shallow and deep wells,spring developments, rainwater collectors, rehabilitation of existing wells, and water treatment units;and (b) providing rural sanitation facilities including household latrines, school and public toilets,

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sullage removal units, and pilot wastewater disposal facilities. Physical project targets are presentedin Table 5A.

5. Other Objectives. Institutionally, the FW4SP aimed to promote: (a) effective communityparticipation for sustainable sector development; (b) development of organizational arrangements forimproved operations and maintenance of water supply facilities; (c) decentralization of Governmentactivities by providing Local Government Units (LGUs) with a greater role in planning,implementation and mofiitoring of sector activities; and (d) training manpower in the planning andimplementation of water supply and sanitation systems.

6. The FW4SP was also intended to promote achievement of Social, Environmental, and PrivateSector Development objectives, particularly the following: (a) poverty alleviation; (b) improvedparticipation of women; (c) reduced pollution; (d) improved health and hygiene; (e) localmanufacture of handpumps; and (f) private sector participation in well construction, operations andmaintenance.

7. Assessment of Objectives. The objectives were well chosen. They were consistent with thepriorities of the Master Plan, and they addressed underlying key issues with respect to institutionalstrengthening for project sustainability, and broader areas of accomplishment as outlined in theBank's Country Assistance Strategy for the Philippines.

B. ACHIEVEMENT OF OBJECTIVES

8. The FW4SP substantially achieved its major objective of providing safe, adequate and easilyaccessible water supply, and proper sanitation. It also made a substantial contribution to thePhilippines' rural water supply and sanitation sector program as embodied in the Master Plan.

Safe and Adequate and Easily Accessible Water Supply and Proper Sanitation

9. Water Supply. The FW4SP originally envisaged the implementation of a total of 25,000water supply facilities. During the early stages of the project, field investigations revealed that aminimum of 3 to 4 wells would be required in each barangay as opposed to one well per barangaystipulated in the Accelerated Program. Along with long delays in the implementation of the facilities,the Government decided to restructure the project, thus reducing the number of barangays planned tobe served from the original project design (from 18,000 to 8,000). Original, restructured, and revisedtargets are presented in Table 5A.

10. Sanitation. The project restructuring also affected the targeted number of sanitation facilities,primarily through reductions in the number of planned household latrines (from 1,000,000 to650,000). By the loan closing date, 65% of these targets were met, with virtually all of the remainderbeing completed by the end of the first quarter of 1998. Most other major project sanitation facilitieswere substantially achieved prior to the extended loan closing date, including school toilets, publictoilets, sullage removal units, and well disinfections. Targets are presented in Table SA.

Institutional Aspects

11. Participatory Objectives. Participatory objectives of the project were intended to beaccomplished through the formation of Barangay Waterworks and Sanitation Associations (BWSAs).

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Formation targets were met, although not all of the BWSAs were sustained due to theinappropriateness of the organization for simple Level I facilities (see paragraph 26). A substantialpercentage of project water supply facilities are reliably maintained by persons originally trainedunder the project to assume a BWSA-related function, but now acting as members of a differententity, such as a Barangay Council or Farmer's Cooperative.

12. Decentralization of Government Activities. The project's decentralization objective wassubstantially affected and speeded up by implementation of the Local Government Code, which wentinto effect in 1992 and called for the devolution of specific responsibilities to LGUs, including watersupply and sanitation. Specific LGU roles with respect to water supply and sanitation programs andprojects were further defined by NEDA Board Resolution No. 4, Series of 1994. The mid-projectlegislation had a substantial effect on sanitation-related activities under the project, whichsubsequently devolved from the DOH to the respective LGUs at the provincial and municipal levels;however, water supply facilities continued to be constructed under the administration of the DPWH.

13. Training of Manpower. The project was partially successful in achieving its trainingobjectives, with at least 75% of targeted participants receiving training in several areas including wellsite selection and well construction, design of water supply facilities, operation and maintenance ofwater supply facilities, and sanitation training. Efforts were less successful in extending the trainingactivities to private sector participants, particularly small ("backyard") well drillers, for which theGovernment was generally reluctant to extend funds. This is a particular source of concern, asbackyard well drillers performed over 60% of the well constructions under the project (Table 5D).The Project, however, appointed an internationally experienced well driller to improve the quality ofwell drilling by providing on-the-job training to DPWVH District Engineering Offices. This resulted insignificant improvements in well drilling.

Social and Environmental Aspects

14. Gender Issues. In response to the Government's pledge to provide equal access to womenunder the project, BWSA pre- and post- formation training was provided to large numbers of womenparticipants, which also resulted in a substantial percentages of women BWSA members (estimated atabout 40%). Many occupational roles in the Philippines, particularly in the health and sanitationfields, are already dominated by women.

15. Improved Health and Hygiene. Improved hygiene behavior was observed in barangayswhere household latrines were constructed using plastic, water seal, pour-flush typw toilet bowls.Educational materials were also distributed to support the sanitary and hygienic use of these facilities.Many of these materials, although fully distributed to the Regional Departments of Education,Culture and Sports (DECS) by DOH, were often subject to long delays in redistribution to theintended end users (primary schools), which would have diminished somewhat the benefits of thefacilities, and in particular could have had some effect on the number of observed toilets which faileddue to improper sanitation practices.

16. Other Issues. Although difficult to quantify such benefits, the project is consideredsuccessful with respect to poverty alleviation and improvement of environmental conditions. Itwould have indirectly assisted in poverty alleviation by generally improving health conditions, and byreducing the amount of time spent fetching water, thereby making more time available for income-generating activities. Similarly, the project would have accomplished its stated environmentalobjectives (cleaner homes and community environments; reduced stream pollution; and more rational

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and prudent water use) to the extent to which original project water supply and sanitation facilitytargets were met.

Private Sector Development

17. The FW4SP was highly successful in fostering the development of private sectormanufacturing capability, and considerably less so at promoting private sector construction,operations and maintenance of water supply facilities.

18. Manufacture. Prior to FW4SP, only the shallow well handpumps were produced in thePhilippines whereas the deep well handpumps and the plastic toilet bowls were imported. The projectpromoted and assisted in local manufacturing capability of these items including external qualitycontrol mechanisms. Specifications were developed with assistance by the UNDP/World BankWater Supply and Sanitation Program conforming to international standards. Quality of the locallyproduced handpumps and plastic toilet bowls were tested and verified by external quality consultants.A total of 1,900 deep well handpumps or 71% of the total project requirements and 100% of plastictoilet bowls (650,000) were locally produced for FW4SP. All project shallow well handpumps withimproved specifications were also locally manufactured.

19. Availability of spare parts for newly introduced, locally produced products was seen as apossible impediment to project sustainability. The most commonly used spare parts for the deep wellhandpumps (cups) are obtainable in the market, although generally of low quality. Many of theproject beneficiaries appeared not to be informed that a wide variety of high quality deep wellhandpump spare parts are still available at relatively low cost from the manufacturer; this wasverified by the ICR mission.

20. Construction. Project school toilets and public toilets were constructed by privatecontractors who bid for the works in accordance with the Bank's Local Competitive Bidding (LCB)procedures, as stipulated in the project design. The project design had also intended for private sectorinvolvement in well construction through LCB packaging of contracts for professional well drillers,with a minimum of approximately 100 wells per contract. Such large contracts proved impractical,and were therefore never implemented. The DPWH either constructed project wells using its ownDistrict Engineering Office (DEO) well drilling personnel, or resorted to much smaller labor-onlycontracts (10-20 wells apiece) for implementation by "backyard" well drillers who were furnishedwell construction materials by the DPWIH. These small well drillers were often poorly equipped andtrained, and therefore unable to properly construct the wells according to project specifications.

21. Maintenance. Private sector maintenance of handpumps was observed in some areas of theproject, where locally run shops were reported to be performing handpump repairs. However, theintended nature of private sector involvement was not clearly defined at project appraisal, and therewas no systematic program developed under the FW4SP to foster such widespread participation.DILG's Capacity Enhancement Program, implemented in the latter part of 1997, utilized NGOs tofoster private sector handpump repair. Additional monitoring conducted during the operations phaseof the project should serve to assess the longer term success of this activity.

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Economic Analysis

22. At project appraisal, the economic rate of return on the project's water supply componentwas estimated at 8% (weighted average) based on a comparison of the then-estimated production costof water and, as a proxy for the water's value, the average unit -cost of water developed under theGovernment's Accelerated Water Supply Program. At project closing, updated water production costfigures were provided by DPWH (capital costs) and DILG (operation and maintenance costs), and thewater's value was re-estimated based on a current range of unit prices established under theUNDP/WB-PHI Project, resulting in a recalculated weighted average economic rate of return of 5%,or lower than at appraisal. However, a sensitivity analysis indicates that the weighted average mightreasonably be expected to vary from as low as 1% to as high as 14%. The estimated financial rate ofreturn has not been calculated in view of the project's perceived failure to levy charges adequate tocover operation and maintenance costs and debt service, and its unquantifiable social benefits.

C. MAJOR FACTORS AFFECTING THE PROJECT

Project Planning and Administration

23. Provincial Planning Activities. Project design considered that implementation of majoractivities would be undertaken by the three Government agencies (DPWH, DOH, and DILG) in asynchronized manner, in accordance with the Provincial Water Supply, Sewerage and SanitationSector Plans. Effective usage of the Plans and synchronization of Plan-related activities both provedto be problematic. Adoption of the Plans (in the first 8 provinces covered under the project) was acondition of loan effectivity, and the Government took considerable time in locating grant funding forplan preparation. The tight time frame under which the Plans were therefore produced appears tohave resulted in a lack of verification of data sources. Technical expertise in plan preparation wasfocused on demand allocation rather than source identification, and plan accuracy did not extendbelow the municipal level. The result of these factors appears to have been that, although Plans wereprepared in close consultation with DILG and with Local Government Personnel, the Plansthemselves did little to directly assist these personnel in effectively determining specific projecttargets.

24. Interagency Coordination. Poor coordination between the national implementing agenciesand the field implementors caused difficulties in the early part of the project phase. In particular,miscoordination between the DILG (community development) component and the DPWH(construction of water supply facilities) component resulted both in mismatches between targets forBWSA formation versus construction of water supply facilities, and in the out-of-sequenceoccurrence of project related activities (e.g. water supply facility construction proceeding ahead ofBWSA formation in many instances). Lack of synchronization of agency budget releases was oftenblamed for this, with requests and releases of individual project-related budgets for each agencybeing separately processed through the Department of Budget and Management (DBM).

25. Local Government Code. With the enactment of the Local Government Code, DOH lostdirect control over implementation of many field activities at the municipal level, such as those of theRural Sanitary Inspectors who facilitated construction of the household latrine units. In isolatedinstances, this appears to have resulted in the priorities or activities of such personnel being divertedfrom their assigned duties, and in cases of misuse of equipment procured under the project. DILG'srole was expanded in respect of its mandate to strengthen local government capability, and their

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central office was subsequently restructured. Provincial Action Officers responsible for coordinationof DILG's project-related local government strengthening role remained based at the central office,and appear to have been hampered somewhat in their efforts to coordinate field activities due toconstrained schedules and travel budgets. Despite the observed problems with coordination andutilization of services and equipment at the local level associated with the mid-project shift inadministrative responsibilities, the LGUs themselves generally appear to be very satisfied with theincreased level of autonomy, which has brought more efficient delivery of services and has allowedproject implementation to be more appropriately tailored to suit local conditions.

26. User Acceptance. At the local level, sustainability of water supply and sanitationimprovements is dependent upon acceptance of responsibility; such degree of acceptance variedwidely from one BWSA to another. Data collected in the field for some areas of the project by DILG(Table 6) would indicate that, on average, about 70% of the BWSAs formed under the projectcontinued to function as intended at the close of the project. The wide variation in reported resultsfrom province to province questions the accuracy of the data; ignoring the results of the two regionsreporting the highest rates of success (e.g., two provinces report a failure rate of 0%) results in acalculated rate of success of about 50%, which may be more realistic and is in any case still aconsiderable improvement over the estimated success rate (25%) of the previous Bank-funded sectorproject.

27. Sustainability of school and public toilets was also adversely affected in many instances bylack of a proper organization to operate and maintain the facilities, or low degree of commitment bythe responsible entity. Not surprisingly, the most successful public toilet facilities appeared to belocated in areas which were served by a private entity such as a church or a market association. Suchfacilities were able to collect fees for use, which were then used to purchase water and maintenanceof the units, in some instances even resulting in substantial profits which could be used to enhance thefacilities or area served by the toilet. In many other cases, LGUs which were given toilets did nothonor contracts or pledges to provide water and otherwise maintain the toilets, and the facilities soonfell into disuse. Degree of usage of school toilets was also highly variable, with many facilities wellmaintained and used, others seldom used or unused and some facilities not functioning because ofblocked septic lines.

Financial Reporting

28. Financial reporting by some of the implementing agencies, particularly on operations andexpenditures relative to the project, was inadequate. Some audit reports were late by more than oneyear. It was reported that some project staff appeared not to know what was expected by the Bank, oreven by their own auditors. Lack of staff dedicated specifically to FW4SP financial aspects appearsto have partly caused the problem; another factor may have been the result of staff changes. Thelessons given from the previous Rural Water Supply and Sanitation Project in this respect appear notto have been taken into account.

Procurement and Quality Control

29. Implementation of Household Latrines. The project subcomponent initially suffered severallong delays relating to procurement and quality control, and therefore did not achieve substantialresults prior to mid-1995. The initial intended procurement of 450,000 toilet bowls was conducted bythe Department of Budget and Management Procurement Service (DBM-PS) rather than by the DOH.

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DBM-PS deferred award of contract after bids were submitted by four prospective manufacturers,which ultimately resulted in a court case filed by one of the four bidders, and a subsequent furtherdelay of approximately one year. The end result was the entire procurement was rebid in twobatches. Once the procurement was rebid and finally awarded, there were further delays associatedwith initial quality control problems, including problems with tolerances in the P-trap. However, theplastic bowls produced were of high quality and conforming to standards and specificationsdeveloped by the UNDP/ World Bank Water and Sanitation Program as part of the appropriatesanitation technology for rural applications. Finally, in many instances the latrines themselves werenot installed according to project specifications, the most frequently reported problem being the lackof a vent pipe (about 40%).

30. Quality of Well Construction. The failure to get well equipped and qualified professionaldrilling contractors involved in the project is believed to have adversely affected the finished qualityof many of the project wells, particularly the harder-to-construct deep wells. For most of the wellsthere was also little monitoring of important topographical, geological or hydraulic/ hydrologic data.Estimates of the failure rate of project wells range from below 10% (shallow wells, reported byDPWH) to over 30% (deep wells, reported by DILG). The relative proportion of reported failures ofdeep wells versus shallow wells (about 2:1 for both agency-specific sets of data) is probably a morereliable indicator than the gross figures, as both sets of data are incomplete, and random checkingrevealed numerous inconsistencies between the two sets. The approximate gross failure rate is fairlyconsistent with the BWSA sustainability figures, if it is considered that a certain number of facilitiesare maintained by entities other than BWSAs.

D. PROJECT SUSTAINABILITY

31. Achievement of sustainment of project benefits at the community level will requiremaintaining functional BWSAs or practical alternatives to the BWSA structure, which will promoteregular maintenance of the facilities. The results of the rapid assessments conducted during Banksupervision provide indications of the effectiveness of using an intermediary such as an NGO toassist LGUs in developing viable BWSAs who would be responsible for the sustainable operation andmaintenance of water facilities provided under FW4SP.

32. Sustainability of project benefits will also require local government to maintain facilities builtin public places (schools, markets, health laboratories). The findings and the observations of the ICRmission in its limited sampling found that more than half of these facilities were not well maintained.The project's Capacity Enhancement Program managed by DILG and implemented by an NGO was arelatively successful attempt to provide the necessary support to enhance sustainability of facilitiesand organizations. However, due to time constraints this program was focused on only one out ofthree batches of communities Application of an effective, long-term operations phase plan (SectionH), to be conducted with the assistance of the three implementing agencies, will be required.Periodic support by the Bank will also be required, to advise and assist with each specific action area.In the future, Bank-financed sector projects in the Philippines may wish to incorporate aspects ofoperational assistance to previous projects into the project designs.

E. BANK PERFORMANCE

33. Identiflcation and Preparation. The Bank's performance during identification andpreparation of the project was satisfactory, with substantial and adequate inputs having been provided

8

by Bank Staff during these phases. The multi-implementing-agency approach adopted, which hadbeen used with moderate success in the Philippines in an earlier Bank-financed project (Rural WaterSupply and Sanitation Project, Loan 2206-PH), did not turn out to be the appropriate arrangementunder FW4SP. Problems which later occurred in respect of project coordination might have beenpartially averted by more closely involving Government agencies with peripheral project-relatedresponsibilities, in addition to the primary implementing agencies, from the earliest stages ofpreparation.

34. Appraisal. Performance during Project Appraisal was considered adequate, although theBank failed to foresee a number of issues which later became problematic in the implementation ofthe FW4SP: (a) reluctance of the Government to commit GOP or loan funds for planning-relatedactivities or private sector training activities; (b) relatively low level of commitment of BWSAs tooperate and maintain Level I water supply facilities; and (c) lack of Government support for privatesector contracting of project water supply facilities. Item (b) is particularly significant in view ofsimilar observed failures under the earlier Rural Water Supply and Sanitation Project.

35. Supervision. Supervision performance was generally considered satisfactory. The recordsindicate that the Bank was fairly prompt in responding to most project developments and to the needsof the implementing agencies and in responding to problems relating to financial reporting andprocurement. In the last 18 months of the project, there was greater focus on field supervision whichbrought the project to a more successful completion.

F. BORROWER PERFORMANCE

36. The three implementing agencies (DPWH, DOH, DILG) performed reasonably well,considering the extensive staffing changes which occurred during the project, and the mid-projectchange in organization and responsibilities brought about by the Local Government Code. Problemsobserved due to lack of coordination and synchronization between the agencies could have beenpartly averted by better planning and more effective use of the Project Coordinating Committee.However, many such problems would almost appear to be inherent in the three-agency design of theFW4SP. Observed deficiencies in financial reporting are somewhat harder to defend.

37. On account of delayed submission of Audit Reports by DPWH from years 1992 up to 1994,the Bank effective October 15, 1995 suspended disbursements for eligible expenditures underCategories 1, 2a, 2b, 2c and 2e of Schedule 1 of the Loan Agreement which are all parts of the WaterSupply component of DPWH. The disbursements for the rest of the components implemented byDOH and DILG were not suspended. The Commission on Audit (COA) Audit Reports for years1992 and 1993, which were finally submitted to the Bank in November,. 1995, revealed seriousdiscrepancies in the accounts of DPWH in connection with undelivered supplies and materials forwhich payments were made by the Bank since 1992 totalling to about $2 Million. The audit reportstraced the causes of the findings largely to poor inventory and financial controls.

38. Because of the seriousness of the audit findings, the Bank requested DPWIH to take action onthe findings and recommendations of the audit reports and required the government to refund thepayment for undelivered materials before considering the lifting of suspension and further extensionof the loan. The said amount was subsequently refunded to the Bank while extension of the closingdate was not made applicable to the affected DPWH rural water supply component which wasterminated on February 16, 1996.

9

39. Although support for achievement of the main project objectives was good, less attention wasgiven to achievement of the FW4SP's institutional and private sector development objectives. Inparticular, the failure to train or certify private sector well drillers, or to pursue construction of projectwells utilizing professional well drilling contractors, were seen as major shortcomings. The LocalGovernment Code gave strong support to the project's decentralization objective, but also served tohighlight many instances of the LGUs' inability or unwillingness to implement the project accordingto its design, and of the National Agencies' failure to provide strong technical support when needed.

G. ASSESSMENT OF OUTCOME

40. The project outcome is considered satisfactory, as substantial accomplishment of therestructured water supply and sanitation physical targets was achieved. The best physicalaccomplishments in gross percentages were in development and rehabilitation of water sources, with100% completion of the restructured targets having been achieved. The least successful physicalresult was in the completion of the wastewater treatment units, where only 44% (representing 44units) of the target were able to be constructed prior to the final loan closing date, although there isstill a commitment by local government to install the remaining 56 units in certain parts of MetroManila, beyond the close of the project. The wastewater treatment activities is an on-going pilotstudy of DOH. Progress in the household latrine subcomponent, which suffered greatly in the earlystages of the project, was excellent in the later stages of the project, with the entire manufacture anddelivery of plastic toilet bowls being completed prior to the loan closing date. Seventy percent of thetoilet bowls were installed at the end of December 1997 and the remainder will be installed under theGovernment's sanitation program for 1998.

41. The lessons learned from the foreign-funded projects, particularly FW4SP, have led tosignificant policy changes and improved practices for both the Government and the Bank, such as:

a) NEDA Board Resolution No. 4, 1994 amends NEDA Board Resolution No. 5, 1989 and allowsLGUs to implement all levels of water supply projects;

b) in 1995 DBM instituted the General Allotment Release Order (GARO) and the Special AllotmentRelease Order (SARO) to overcome late releases of funds;

c) Central COA undertook a study on "Transparency and Internal Controls" in 1996/1997 usingFW4SP as one of its case studies and has recommended significant changes and improvements.Improved and systematic accounting and auditing practices have been put in place for this andother projects; and

d) the Philippines Resident Mission has started a series of regular disbursement and procurementseminars for staff in project management offices.

H. FUTURE OPERATION

42. Theoretically, the BWSA concept should have provided for the long-term operations andmaintenance of the water supply and sanitation facilities constructed. Therefore, no element ofcontinued external support was considered in the project design. However, given the scope of theproject, the ultimate responsibility for operating and maintaining the completed water supply andsanitation facilities must still rest with the LGUs and Barangay recipients, and ongoing technicalsupport from the national implementing agencies will be required to achieve this. The operationsphase plan for the FW4SP, presented as Table 6B, emphasizes activities which are intended tostrengthen local government capabilities generally, and specifically to enhance BWSA sustainment.

10

The funding to sustain the operations phase effort will have to come from other sources, e.g., ADBnewly funded water and sanitation project as well as the Government funded poverty alleviationproject where most staff at the national agencies continue to be those from FW4SP.

I. KEY LESSONS LEARNED

43. The concept of the project was sound, and in accordance with the sectoral goals of thePhilippine Government. Most problems which occurred in the implementation and operation of theFW4SP could be avoided in the future through careful project design, appropriate institutionalarrangements, better tailored training activities, close Bank supervision of implementation, andprompt action in response to deficiencies noted.

44. The principal lessons learned are summarized as follows:

Principles/Design

a) Multi-agency type of projects should be avoided; where National Government Agencies areinvolved, it is recommended that a single agency serve as the executing agency;

b) Projects should support decentralization where projects are planned and implemented by theLocal Government Units (LGU), National Government Agencies (NGA) can provide theexecuting agency role, Provincial Government can assist with technical assistance, supervisionand monitoring, and the Municipality and Barangay should be the focus of implementation;

c) Cost recovery principles should be promoted and implementing agencies, i.e., LGUs, shouldborrow funds for investments and be fully accountable for them;

d) Small civil works contracts, such as those under this Project, should be undertaken by LGUs;procurement of all goods can also be handled by LGUs; certain items (e.g., deep well handpumpsand plastic toilet bowls) can be procured at the central level to achieve economies of scale and tomaintain quality;

Preparation

e) All Government agencies with both direct and peripheral responsibility to the project should beinvolved from the earliest stages of project preparation;

f) At the beginning of project preparation an institutional assessment should be conducted for thecapability and experience of the LGUs. Appropriate and more intensive technical assistanceshould be provided to the weaker LGUs;

g) Planning, designing and implementation of sub-projects by LGUs should be based on need anddemand and in close consultation and participation with the community;

Implementation

h) A supporting environment which will enable LGUs to succeed should be promoted, e.g., simplifyprocedures, establish mechanisms which will speed implementation, allow procurement byLGUs, develop a proper system of accounting and financial reporting;

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i) The first year of project implementation should include the preparation of a comprehensiveproject implementation plan with sub-project proposals from the community, prior to the start ofconstruction;

j) Continue to support local private sector manufacturing capability and promote private sectorparticipation in O&M;

k) Where appropriate and where skills are available, LGUs should work with NGOs for communityorganizing as well as contractors in the small physical works; the cooperation betweenintermediary and local government would require clear definition of roles and responsibilities inall phases of the project and after;

1) Utilization of pre-existing community organizations for the operation and maintenance of Level I(point source) water supply facilities should be considered in future project designs; more formalassociations such as BWSAs should be promoted only for higher level (Levels II and III)facilities;

Supervision

m) Full supervision missions should visit the project at frequent intervals in the initial stages of theproject, and at other critical periods, with particular emphasis on adherence to financial andprocurement policy;

n) Strong and appropriate action, such as suspended disbursements, should be taken in light ofdelayed audits; and

o) The World Bank supervision mission should include a procurement staff from the ResidentMission to undertake field reviews of accounting procedures and physical facilities, at leastannually.

12


PHILIPPINES


PART II: STATISTICAL ANNEXES

Table 1: Summary of AssessmentTable 2: Related Bank Loans/CreditsTable 3: Project TimetableTable 4: Loan/Credit Disbursements: Cumulative Estimated and ActualTable SA: Physical AccomplishmentTable 5B: Social AspectsTable 5C: Local ManufactureTable 5D: Private Sector Well ConstructionTable 5E: Technical and Institutional TrainingTable 5F: Private Sector Capacity EnhancementTable 5G: Quality and Adequacy of Water Supply FacilitiesTable 5H: Quality and Adequacy of Sanitation Facilities (School and Public Toilets)Table 51: Quality and Adequacy of Sanitation Facilities (Household Latrines)*Table 6A: BWSA Activity LevelTable 6B: Operations Phase PlanTable 7: Studies Included in ProjectTable 8A: Project CostsTable 8B: Project FinancingTable 9A: Economic Rate of RetumTable 9B: Sensitivity AnalysisTable 10: Status of Legal CovenantsTable 11: Compliance with Operational Manual StatementsTable 12: Bank Resources: Staff InputsTable 13: Bank Resources: Missions

13

IMPLEMENTATION COMPLETION REPORTPHILIPPINES


Table 1: Summary of Assessments

A. Achievement of Objectives Substantial Partial Negligible Notapplicable

(Vt) (Vt) (Vt) (Vt)

Macro Policies O O O Sector Policies El / O OFinancial Objectives El V O ClInstitutional Development O 0 Physical Development V/ O O .Poverty Reduction Vt/ O O OGender Issues E E O Other Social Objectives O O O VEnviromnental Objectives VI O O Public Sector Management E Ol OPrivate Sector Development E O 1OOther (specify) O O V/

B. Project Sustainability Likely Unlikely Uncertain

(V) (V) (V)

Highly C. Bank Performance satisfactory Satisfactory Deficient

(V) (V) (V)Identification O V/ EPreparation Assistance E V/ EAppraisal VI ElSupervision O V El

HighlyD. Borrower Performance satisfactory Satisfactory Deficient

(V) (V) (V)Preparation El V OImplementation E V OCovenant Compliance O V OOperation (if applicable) O V O

Highly HhyE. Assessment of Outcome Satisfactory Satisfactory UnsatisfactoryUnsatisfactory

(V) (/) (V) (t)Ol V/ E a

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Table 2: Related Bank Loans/Credits

Loan/credit title Purpose Year of Statusapproval

Preceding operations

1. Manila Sewerage Improve sanitation in the poor and 1980 Completeddensely populated areas of MetroManila and develop the institutionalcapacity to implement similar projectsin future.

2. Rural Water Supply Development and mobilization of 1983 Completedresources for the water supply andsanitation sector, and the organizationand strengthening of theimplementation capabilities ofinstitutions responsible for the sector.The project also supports the objectivesof the Rural Water Supply andSanitation Master Plan which focuseson specific policies, targets andprograms for the provision of watersupply and sanitation in the rural areas.

Following operations

1. Manila Second Sewerage Enable MWSS to radically expand its 1996 Activeseptage management program andestablish the conditions needed formedium-term low-cost improvement ofsewerage services in Metro Manila.

2. Water District Promoting private sector participation 1998 PreparationDevelopment in water districts' building capacity for

economic regulation, training, andsewerage investments.

3. LGU Urban & Water To support investment and institutional 1999 PreparationSanitation strengthening of urban LGU water and

sanitation utilities.

15

Table 3: Project Timetable

Steps in Project Cycle Date Planned Date Actual/Latest Estimate

Identification (Executive Project Summary) 11/20/89 (final)

Preparation 6/26 - 7/15/89

Appraisal 10/89 9/25 - 10/13/89

Negotiations 2/28/90 5/10/90

Board Presentation 4/30/90 6/28/90

Signing 7/9/90

Effectiveness 1/15/91

Midterm review (if applicable) n/a n/a

Project Completion 6/30/95 12/31/97

Loan Closing 12/31/95 12/31/97

Table 4: Loan Disbursements: Cumulative Estimated and Actual(US$ Millions)

FY91 FY92 FY93 FY94 FY95 FY96 FY97Appraisal Estimate 10.70 31.00 49.60 67.50 81.80 85.00

Restructured Estimate 3.71 11.26 18.95 37.29 58.00

Revised Estimate 45.29 47.93

Actual 4.99 12.79 15.35 22.09 29.72 37.21 44.70

Actual as % of Restructured/Revised 135% 114% 81% 59% 51% 82% 93%Estimate

Date of Final Disbursement May 18, 1998

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Table 5A: Key Indicators for Project ImplementationPhysical Accomplishment

Item Original Restructured Revised ActualTarget Target Target Completed

PlanningPreparation of Provincial Water Supply, 37 28 28 37Sewerage and Sanitation Sector Plans

Water Supply .Shallow Wells 11,000 6,950 6,717 6,717Deep Wells 7,000 2,550 2,664 2,664Spring Developments 1,000 650 660 660Well Rehabilitation 5,000 3,200 3,171 3,171Rain Water Collection Installation 200 200 188 188Pilot Water Treatment Units 1,000 500 436 397Workshop Construction 25 25 25 25

SanitationHousehold Latrines 1,000,000 650,000 650,000 457,792School Toilets 1,000 1,000 1,000 999Pilot Communal/ Public Toilets 100 100 100 99Pilot Wastewater Treatment Units 100 100 100 44Sullage Removal Units 1,000 1,000 1,000 1,000Well Disinfections 1,000,000 1,000,000 1,000,000 1,000,000Sanitary Well Protection Units 0 1,000 1,000 942Water Laboratory Equipment Sets

Regional Laboratories 13 13 14 14Provincial Laboratories 75 75 76 60

Community DevelopmentBWSAs Formed 18,000 7,845 7,756 7,756

17

Table 5B: Key Indicators for Project ImplementationSocial Aspect (Women's Participation Level)'

Project Province BWSA Members Women Members % Women MembersCordillera Admin.Region (CAR)Ifugao 1,953 489 25%Mountain Province 1,883 564 30%Kalinga 1,946 333 17%Benguet 1,672 502 30%Region ILa Union 8,424 2,527 30%Pangasinan 19,424 5,827 30%Region II -Quirino 1,612 484 30%Isabela 9,632 2,341 24%Region IIIBulacan 4,967 1,582 32%Pampanga 6,793 2,903 43%

Region IV-AAurora 1,366 488 36%Batangas 13,900 9,137 66%Quezon 4,577 4,142 90%Region IV-BMarinduque 2,758 994 36%Palawan 3,908 609 16%Romblon 2,406 267 11%Region V _Camarines Norte 5,479 1,852 34%Camarines Sur 978 382 39%Catanduanes 783 181 23%Sorsogon 14,058 2,453 17%

Total 101,065 38,059 38%

* Data reflects information provided to DILG-WSSPMO by government field personnel (ProvincialAction Officers) in late 1997. Not included in the table are project provinces for which data was not submitted.

Table SC: Key Indicators for Project ImplementationPrivate Sector Development Aspects - Local Manufacture

Item Total No. Total No. Locally % LocallyProduced Manufactured Manufactured

Shallow Well Handpumps 7,150 7,150 100%Deep Well Handpumps 2,664 1,900 71%Plastic Toilet Bowls 650,000 650,000 100%

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Table 5D: Key Indicators for Project ImplementationPrivate Sector Development Aspects - Well Construction

Total Wells per Wells Constructed Wells ConstructedProject Province/Region Province in by Backyard Well by DEO Personnel

Survey DrillersNo. % of No. % of

Total TotalCordillera Administrative Region (CAR)

Ifugao 18 8 44% 10 56%Mountain Province 30 30 100% 0 0%

Region ILa Union 180 95 53% 85 47%

Pangasinan 519 344 66% 175 34%Region II

Quirino 43 43 100% 0 0%Cagayan 150 74 49% 76 51%

Isabela 99 99 100% 0 0%Region I1

Bulacan 642 640 100% 2 0%Nueva Ecija 373 279 75% 94 2%

Pampanga 824 824 100% 0 0%Region IV-A .

Batangas 390 31 8% 359 92%Cavite 100 48 48% 52 52%

Quezon 111 111 100% 0 0%Region IV-B

Marinduque 70 0 0% 70 100%Palawan 159 87 55% 72 45%

Romblon 82 33 40% 49 60%Region V .

Albay 728 146 20% 582 80%Camarines Norte 344 141 41% 203 59%

Catanduanes 79 57 72% 22 28%Masbate 118 0 0% 118 100%

Sorsogon 714 499 70% 215 30%

Total 5,773 3,589 62% 2,184 38%

* Data reflects information provided to DPWH-PMORWS by specific DEOs during 1997. Not included in thetable are provinces for which DEOs did not submit data.

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Table 5E: Key Indicators for Project ImplementationTechnical and Institutional Training Activities

Institutional Component

Item Number of Number ofParticipants Participants

Targeted Trained

BWSA Pre-formation Training 310,120 232,180BWSA Post-formation Training 108,584 79,087

Sanitation Component

Activity Number of Number ofParticipants Targeted Participants Trained

National Sanitation Training Program 120 RSIs 114 RSIsRegional Sanitation Training Program (Ph-I) 1,300 RSIs 1,807 RSIsRegional Sanitation Training Program (Ph-II) 2,800 SEs 2,262 SEsSkills Training for Sanitary Engineers 200 SEs 139 SEsSkills Training for Supervising and District 400 SIs 346 SIsSanitary InspectorsWater Quality Management Training- Bacteriological Analysis 120 Mec. Tech. 182 Med. Tech.- Chemical Analysis 60 Chemists 29 Chemists

Health and Hygiene Education Material Distribution

Items Target Distributed

Posters 466,000 pcs. 1,439,000 pcs.Comics 3,000,000 pcs. 6,000,000 pcs.Handbills 3,000,000 pcs. 3,000,000 pcs.TV Promotions 6 hrs. 6 hrs.Radio Promotion I0 hrs. I0 hrs.

20

Water Supply Facility Design and Construction Training

Number of Number of ParticipantsActivity Participants Targeted Trained

Seminar/Workshop in the 18 Water Supply Engrs 18 Water Supply EngrsDetermination of Water Well Location & Well Drillers & Well DrillersTraining on Quality Control for 122 Water Supply Engrs 122 Water Supply EngrsConstruction and Development of Wells & Well Drillers & Well Drillers

Training of Trainors Program in Water 58 Water Supply Engrs 58 Water Supply EngrsSupply Implementation and Provincial Engrs. and Provincial

Engrs.Skills Training on Operation and 521 Municipal Engrs. 521 Municipal Engrs.,Maintenance of Level I Water Supply 6,916 BWSA 6,961 BWSAFacilities Officers/ Caretakers Officers/ CaretakersTraining on Low Cost Water Treatment 37 Water Supply Engrs 37 Water Supply EngrsFacilities & Well Drillers & Well DrillersImplementation Planning Workshop 35 35 PMO Staff

Orientation on the Preparation of 130 COA Auditors,Statement of Expenditures Accountants, Book-

keepper and WaterSupply Engineers

Orientation on the International Bidding 22 Procurement andGuidelines and Procedure Staff Engineers

Table 5F: Key Indicators for Project ImplementationPrivate Sector Capacity Enhancement Activities

Program No. of Project Total No. of Percentage of TotalProvinces BWSAs within BWSAs CoveredCovered the Covered within the Covered

Provinces Provinces

ITN/ NGO Involvement Pilot Project 1 21 4%UNDP-PEH (93/10), Organization andTraining of Beneficiaries of Water and 2Sanitation ProjectsCapacity Enhancement Program (NGO) 28 3,700 50%

21

Table 5G: Key Indicators for Project ImplementationQuality and Adequacy of Water Supply Facilities*

Project Province Number of Operational Facilities Number of Non-Operational._____________________ Surveyed Facilities Surveyed

DW SW SD RC TOT DW SW SD RC TOTCordillera Admin. Region 40 15 113 12 180 10 0 11 0 21(CAR) ____ _

Region I 230 439 31 2 702 14 1 0 0 15

Region II 171 242 18 4 435 5 2 0 0 7

Region III 566 1703 31 0 2300 54 126 1 0 181

Region IV 551 780 129 107 1567 102 27 7 0 136

Region V 425 726 98 14 1263 280 197 5 3 485

Total (Number) 1983 3905 420 139 6447 465 353 24 3 845

Total (%) 81% 92% 95% 98% 88% 19% 8% 5% 2% 12%

* Data reflects informnation provided to DPWH-PMORWS by specific DEOs during 1997. Areas for whichDEOs did not provide such information are not reflected in the table.

"Operational" is defined as functioning at the time of the field survey.

DW = Deep WellSW = Shallow WellSD = Spring DevelopmentRC = Rainwater Collector

22

Table 5H: Key Indicators for Project ImplementationQuality and Adequacy of Sanitation Facilities (School and Public Toilets)*

Region Number and Percentage of Number and Percentage ofSurveyed Sanitation Facilities Surveyed Sanitation Facilities

Being Utilized Not Being UtilizedSchool Toilets Public Toilets School Toilets Public ToiletsNo. % No. % No. % No. %

Cordillera Admin. Region 36 51% 3 75% 34 49% 1 25(CAR)Region I 0 0Region If 38 52% 35 48%Region III 38 60% 12 48% 25 40% 13 52%Region IV 48 72% 22 69% 19 28% 10 31%Region V 38 57% 29 43%Region VI 1 1 85% 2 15%Region VII 41 68% 10 77% 19 32% 3 23%Region. VIII 34 52% 31 48%Region IX 36 78% | l 10 22%RegionX 12 46% 14 54%Region XI 34 64% 13 87% 19 36% 2 13%Region XII 30 75% r l 10 25%ARMM 11 58% _ _ 8 42%CARAGA 12 48% 13 52%NCR 40 73% 2 29% 15 27% 5 71%

Total 459 62% 62 65% 283 38% 34 35%

* Data reflects field surveys conducted in late 1997 by the DOH-EHS, covering approximately 75% of theconstructed facilities.

Table 51: Key Indicators for Project ImplementationQuality and Adequacy of Sanitation Facilities (Household Latrines)*

Observed Problem No. of Occurrences Frequency ofSurveyed Occurrence

Bowl not properly set 67 6%P-trap not properly attached 8 1%No P trap installed 20 2%No vent pipe installed 440 40%Superstructure of substandard quality 356 32%

* Data reflects random field surveys conducted in late 1997 by the DOH-EHS, and includes a total of 1113units surveyed.

23

Table 6A: Key Indicators for Project OperationInstitutional Development Indicator (BWSA Activity Level)*

Project Province Number of Number and Number andBWSAs Percentage of Percentage of

Surveyed Active BWSAs Inactive BWSAs

Cordillera Administrative Region (CAR)

Benguet 8 5 62% 3 38%

Region I

Pangasinan 70 70 100% 0 0%

Region II

Cagayan 44 26 59% 18 41%

Region III

Bataan 11 10 91% 1 9%

Bulacan 150 119 90% 13 10%

Pampanga 196 165 84% 31 16%

Region IV-A

Batangas 19 1 5% 18 95%Laguna 38 18 47% 20 53%

Region IV-B

Marinduque 14 14 100% 0 0%

Region V

Albay 71 41 58% 30 42%

Camarines Norte 21 17 81% 4 19%

Camarines Sur 32 13 41% 19 59%

Catanduanes 34 3 9% 31 91%

Masbate 3 1 33% 2 67%

Total 693 503 73% 190 27%

* Tabulated data was provided to DILG-WSSPMO by Provincial Action Officers while validating areas forparticipation in DILG's Capacity Enhancement Program in 1997. "Active" BWSAs are defined as those whichconduct regularly scheduled meetings, collect fees for facility maintenance, and implement repairs of facilities.

Table 6B: Operations Phase Plan

Agency Full Development Specific Actions Required Inputs/ Time Region or Funding SourcesResponsibility/ Objective Frame Province

Subject Covered

DPWH, DILG, * Safe, adequate, and * Maintain regular dialogue between PMOs, EHS, Regional Offices, REOS, Ongoing CAR Rural Water SupplyDOH/ easily accessible RHOs, DEOs, and LGUs, and coordinate activities Romblon and SanitationRural Water water supply * Perform monitoring of facilities (LGUs) Quarterly Aurora Sector ProjectSupply * Validate requests for facility repair (LGUs) As needed Masbate (ADB) (national

Provide technical assistance and advice to LGUs when requested (PMO, As needed level)DEOs)

* Loan equipment and provide spare parts to LGUs when requested (DEOs) As needed Provincial and* Perform monitoring of water quality of completed water supply facilities Biannually Municipal

(PHOs, LGUs) Governments (locallevel)

DOH/ * Proper Sanitation * Maintain regular dialogue between EHS and RHOs, and coordinate activities Ongoing 29 FW4SP Poverty AlleviationRural Sanitation * Maintain regular dialogue between RHOs and LGUs, and coordinate Ongoing Provinces Fund II (national

activities level)* Perform monitoring of school toilets and public toilets (RHOs, LGUs) Quarterly w* Perform regular monitoring of constructed household latrines (RHOs, Ongoing Provincial and

LGUs) Municipal* Liaise with school, government and barangay officials to ensure full usage Ongoing Governments (local

of facilities (RHOs, LGUs) level)* Conduct follow-up visits to assess effectiveness of health and hygiene Biannually

education program, and redistribute materials as appropriate (RHOs, LGUs)

DILG, LGUs/ * Promotion of * Maintain regular dialogue between WSSPMO and LGUs/ MWTFs, and Ongoing Region V WATSAN ProjectInstitutional effective coordinate activities Region XII (UNICEF)Arrangements community * Provide review of MWTF activities (PMO, LGUs) Biannually (national level)for Project participation * Provide update of BWSA assessment database BiannuallySustainability * Organizational * Finalize and implement guidelines on BWSA registration and accreditation By mid- 1998 Provincial and

arrangements for (PMO, LGUs) Municipalimproved operation * Prepare implementation and investment plan (LGUs) Annually Governments (localand maintenance of * Provide technical assistance to LGUs as requested (PMO) As needed level)water supply * Provide review of BWSA functional levels (PMO, LGUs) Annuallyfacilities * Perform and coordinate technical assistance to BWSAs in areas of identified As neededSupporting need (PMO, LGUs, NGOs)governmentdecentralizationTraining manpowerin planning andimplementation ofwater supply andsanitation systems I

Agency Full Development Specific Actions Required Inputs/ Time _ Region or Funding SourcesResponsibility/ Objective Frame Province

Subject Covered

DPWH, DOH/ * Promoting local * Provide detailed performance assessment of locally manufactured Annually Benguet Rural Water SupplyPrivate Sector manufacture of handpumps (PMO, DEOs) Apayao and SanitationDevelopment quality shallow well * Review of commercial availability and Government distribution of spare Annually Kalinga Sector Project

handpumps parts for handpumps (PMO, DEOs) Ifugao (ADB)* Promoting local * Review commercial availability and Government Distribution Policy of Annually Mt. Province

manufacture of PTBs (EHS, RHOs) Aurora Provincial andquality deep well Romblon Municipalhandpumps Masbate Governments (local

* Promoting local level)manufacture ofquality toilet bowls

DILG/ * Increased * Monitor participation of women in water and sanitation activities at the LGU AnnuallySocial and participation of level and the Barangay level (PMO, LGUs)Environmental women in theImprovement planning, operation

and maintenance ofwater supply andsanitation facilities

* Poverty alleviation* Reduction of

diseases related topoor sanitation

26

Table 7: Studies Included in Project

Purpose as defined atStudy appraisal Status Impact of study

or study inception*Low Cost Water Develop appropriate technology Study completed Recommended design forTreatment Unit for the removal of excessive iron in June 1995. treatment units developed,Pilot Study and manganese, to improve rural tested, and later implementedProject (DPWH). groundwater supplies. in the field on widespread

basis.Local Provide assistance in improving Program Local companies developedManufacture of local handpump manufacturing completed in capability to manufactureHandpumps capabilities, and in establishing 1993. Four quality handpumps. One of(DPWH). local quality assurance and local the four participating local

control capabilities. manufacturers companies was subsequentlyproduced trial awarded contract forbatches of 25 manufacture of 1900 projectunits each. deep well handpumps.

Tara Handpump To evaluate the performance of Study completed Possible widespread use ofEvaluation the Tara Handpumps under rural in June 1995. the Tara Handpumps in futureProject (DPWH). conditions in the Philippines, rural water supply projects.

including maintainability,reliability, and acceptance byend users.

ITN-NGO To enhance the sustainability of Program Provided insight into theDemonstration BWSAs in the demonstration completed in effectiveness of the use ofProgram (DILG). area, ITN-NGO would guide and 1994. NGOs to enhance rural

coordinate activities during community developmentcritical stages of BWSA activities.formation.

Pilot Wastewater To test the efficiency of the units Program Following completion ofTreatment Units in removing high BOD content ongoing - 44 installation of the units,(DOH). in septic wastes. units installed sampling will be performed

out of 100 to test the efficiency of thetargeted. units for possible future

widespread use.Capacity To implement sustainability Program Total of 200 BWSAs directlyEnhancement strategies for project facilities completed reactivated and 200 waterProgram (DILG). through revitalization of BWSAs December 1997. supply facilities repaired.

and minor repair activities.Master Plan for Perform feasibility studies and Plan completed Some recommendedNational Urban formulate investment projects in October 1993. investment projects are nowSewerage and for sustainable interventions in proceeding, including theSanitation Sector sewerage, sanitation and solid World Bank funded Water(LWUA). waste. District Development Project

(LWUA).

* For studies not defined at appraisal.

27

Table 8A: Project Costs(As of December 1997)

Appraisal Estimate (US$M) Restructured Estimate (US$M) Revised Estimate (US$M) Actual/Latest Estimate (US$M

ItemIBRD GOP Total IBRD GOP Total IBRD GOP Total IBRD GOP Total

Rural Water Supply -DPWH 37.42 49.73 87.15 29.81 10.42 39.52 24.46 10.17 34.63 25.31 11.54 36.85

Equipment and Materials 25.88 7.67 33.55 15.68 2.07 17.75 11.78 2.07 13.85 12.82 1.83 14.66

Civil Works 3.36 28.49 31.85 8.40 6.42 14.82 7.41 6.42 13.83 7.36 8.07 15.43

Training 0.04 0.47 0.51 0.16 0.16 0.16 0.16 0.20 0.20

Consultancy Services 1.84 0.68 2.52 4.95 0.52 5.47 5.27 0.27 5.54 5.07 0.12 5.20

Quality Control 0.15 0.15 0.07 0.07 0.05 0.05

Administrative Costs 0.47 0.47 1.25 1.25 1.25 1.25 1.30 1.30

Contingencies 6.15 11.95 18.10 0.71

Rural Sanitation - DOH 14.51 17.92 32.43 20.85 24.69 45.54 18.21 24.69 42.90 13.22 22.59 35.81

Equipment and Vehicles 10.19 2.01 12.20 7.44 0.73 8.17 5.99 0.73 6.72 4.60 0.80 5.40

Civil Works 0.79 4.48 5.27 12.86 11.73 24.59 12.22 11.73 23.95 8.62 19.73 28.35

EC/Training/Water Quality 0.37 4.88 5.25 2.06 2.06

Consultancy Services 0.74 0.36 1.10 6.95 6.95 6.95 6.95

Administrative Cost 3.10 3.10 0.55 5.28 5.83 5.28 5.28

Contingencies 2.42 3.09 5.51

Institutional Development - 1.58 3.29 4.87 7.34 10.60 17.94 5.24 3.42 8.66 3.88 4.23 8.11

DILG I

Vehicles and Equipment 0.61 0.61 1.58 1.16 2.74 0.76 0.74 1.50 0.60 0.74 1.34

Community Development 0.16 2.44 2.60 5.45 5.84 11.29 3.28 3.28 3.28 0.08 3.36

Provincial Master Plan 0.61 0.41 1.02 2.78 2.78

Capacity Enhancement Program 0.82 0.82 1.20 1.20 0.82 0.82

Administrative Cost 2.67 2.67 2.59 2.59

Contingencies 0.20 0.44 0.64 0.31 0.31

Special Account 0.13 0.13

Technical Assistance - LWUA 0.57 7.81 8.38

TOTAL 54.08 78.75 132.83 58.00 45.71 103.00 47.93 38.28 86.21 42.55 38.37 80.92

28

Table 8B: Project Financing(as of May 1998)

Appraisal Estimate (US$M) Actual/Latest Estimate(US$M)Source Local Foreign Total Local Foreign Total

Costs Costs Costs Costs

IBRD 30.9 54.1 85.0 16.8 27.9 44.7

Domestic 47.8 0.0 47.8 38.1 38.1Contribution

TOTAL 78.7 54.1 132.8 54.9 27.9 82.8

Table 9A: Economic Rate of Return*

Facility Type Economic Rate of Return Economic Rate of ReturnEstimated at Appraisal Re-estimated at Completion

Shallow Well 29% 17%Deep Well 5% 2%Spring Development 8% 5%

Weighted Average 8% 5%

* The net economic benefits estimated here are limited to the value of water only. It is worth mentioningthat economic benefits from a water supply project also include avoidance of waterbome diseases,increased productivity due to savings in time used for fetching water, and increased household productivitybecause of the availability of water as an input in household activities. The economic value of thesebenefits, although not quantified for this project, if included would further increase computed rates ofreturn.

Cost data derived from facility construction cost figures provided by DPWH, and facility maintenancefigures operation and maintenance figures provided by DILG. Benefit data derived from water unit pricingdeveloped under the UTNDP-PHI project.

29

Table 9B: Sensitivity Analysis*

Price of Water Type of Facility Economic Rate of Return

P3/m3 Shallow Well 17%P3/m3 Deep Well -2%P3/m3 Spring Development -3%

P3/m3 Weighted Average 1%

P4/m3 Shallow Well 29%P4/m3 Deep Well 2%P4/m3 Spring Development 0%


P6/m3 Shallow Well 54%P6/m3 Deep Well 8%P6/m3 Spring Development 5%


* The range of water prices considered applies to similar facilities constructed under the UNDP-PHI Project.

Table 10: Status of Legal Covenants

Agreement Section Covenant Present Original Revised Description of Covenant CommentsType Status Fulfillment Fulfillment

Date Date2.02 01 C Withdrawals to be made, amongst Agreement was reached in respect of

others, in unit rates as may be the adjustment of the unit rates.determined by Borrower and the Bank.

2.02 b 01 C Borrower shall open and maintain in Special account balance wasdollars a special deposit account in the maintained at $5 million.Central Bank.

3.01 b 02 C Borrower shall carry out project inaccordance with the ImplementationProgram in Schedule 5.

Sch. 5.1 05 C Borrower will establish and maintain a The Project Coordinating CommitteeProject Coordinating Committee. met regularly throughout the course

of the project.Sch. 5.2 05 CD Borrower shall cause the provincial Locating appropriate sources of grant

govemments to prepare, adopt, and put funding caused some delay in planinto effect Provincial Water Supply, preparation.Sewerage and Sanitation Sector Plans.

Sch 5.3 05 C Borrower shall designate one DILG DILG's Provincial Action Officersstaff member to act as community (PAOs) were based at the centralorganizer in each province. office and had limited travel budgets

and schedules.Sch. 5.4 05 CP Borrower shall implement the training Very little training was extended to

and community development program. the private sector.Sch 5.5 05 NC DPWH shall provide one year Even without a one year warranty,

warranties to BWSA against defective DPWH is still liable in replacingmaterials and faulty workmanship on defective materials and providecompleted wells and handpumps. assistance to BWSAs.

Sch. 5.6 05 C Borrower shall ensure quality control Quality control was maintaine usingand obtain quality assurance on goods. both an Extemal Quality Assurance

Consultant, and later a GovemmentQuality Control Committee.

Sch. 5.7 05 C Borrower shall organize and conduct a In the future, it might be beneficial toProject Launching Workshop. consider conducting refresher

workshops or relaunchings after amajor restructuring of a project.

Agreement Section Covenant Present Original Revised Description of Covenant CommentsType Status Fulfillment Fulfillment

Date DateSch. 5.8 01 NC Borrower shall undertake biennial DPWH does not presently have a

reviews of its water pricing policy and formnal pricing policy for rural watercost recovery principles, discuss with services. A study is presently beingthe Bank and implement it. undertaken by the Sectoral Task

Group on Water Resources Mgt.,Population Policy Operations Projectexecuted by the Commission onPopulation.

Sch. 5.9 05 CP Borrower shall provide the Bank with Although women's participation in allsuch information about the involvement phases of the project was evident,of women in the project and ensure such participation was not wellequal access to membership and documented.management roles in BWSA.

4.01 a 01 C DPWH, DOH and DILG shall maintain Local Consultant assisted in this task.project accounts. DPWWH was not eligible for Bank

financing as of January 1, 1996.

4.01 b 01 C Borrower shall have Special Deposit DPWH had been in default of projectand Project Accounts audited and audits and became no longer eligiblefurnished to the Bank nine months after for Bank financing as of January 1,the end of each calendar year. 1996.

4.01 c 01 C SOE records shall be maintained, COA audit reports cover SOEretained, access given to, and covered records.by separate opinion.

Covenant Status Covenant ClassC - Complied with I -Accounts/ auditsCD - Complied with after delay 2 -Financial performance/ revenue generation from beneficiariesCP - Complied with partially* 3 -Flow and utilization of project fundsNC -Not complied with* 4 - Counterpart funding

S -Management aspects of the project or executing agency6 -Environmental covenants7 - Involuntary resettlement8 - Indigenous people9 . Monitoring, review and reportingI - Project implementation not covered by categories 1-911 - Sectoral or cross-sectoral budgetary or other resource allocation12 - Sectoral or cross-sectoral policy/ regulatory/ institutional action13 - Other

* If the covenant is complied with only partially or not at all, the reason is provided.

32

Table 11: Compliance with Operational Manual Statements

Statement Number and Title Describe and Comment on Lack ofCompliance

NIL

Table 12: Bank Resources: Staff Inputs

Stage of Planned Revised ActualProject Cycle

Weeks US$ Weeks US$ Weeks US$

Through Appraisal 58.1 117,700

Appraisal-Board 38.3 88,400

Board-Effectiveness

Supervision 39.0 95,500 40.5 88,400 190.8 458,400

Completion 9.0 18,800 9.0 18,800 4.1 10,100

TOTAL 48.0 114,300 49.5 107,200 291.3 674,600

[NOTE: Completion time and dollars to be updated when final figures known.Task budgeting began in FY96.Does not include travel and other costs - only staff time.]

33

Table 13: Bank Resources: Missions

Performance Rating

Number Specialized Implemen Develop-Stage of Month/ of Days in Staff Skills -tation ment Types of

Project Cycle Year Persons Field Represented Status Objectives Problems

Through 2/89 5 18 FA, SE, PS, CSAppraisal 6/89 14 19 FA, SE, ME,

PE, IE, SO,TR, NGO

Appraisal through 9/89 5 18 FA, SE, ME,Board Approval PE, CS

6/90 3 12 SE, PE, TRBoard Approval 12/90 1 18 FA - -

throughEffectiveness

Supervision 10/90 2 FA, SE 2 1

12/90 1 FA 1 I

06/91 2 FA, consultant 1 I

10/91 2 FA, SE 2 I

03/92 2 FA, SE 2 1

04/93 2 FA, ME 2 1

08/93 2 FA, SE 3 2

05/94 2 FA, SE S S

11/94 2 FA, SE S S

07/95 1 SE S S

02/96 2 SE, AN S S

01/97 2 7 AN, CE S S

07/97 1 5 AN S S

09/97 2 8 AN, CE S S

Completion 10/97 1 14 AN _

FA = Financial Analyst PE = Project Engineer (water)SE = Sanitary Engineer CS = Computer SpecialistME = Municipal Engineer TR = Training ConsultantAN = Anthropologist IE = Institutional ExpertCE = Civil Engineer SO = SociologistPS = Procurement Specialist NGO = Non-Governmental Organization

34 Appendix AICR Aide Memoire

PHILIPPINES

FIRST WATER SUPPLY, SEWERAGE AND SANITATION SECTOR PROJECT

(LOAN 3242-PH)

WORLD BANK IMPLEMENTATION COMPLETION MISSIONOCTOBER 6 - 22, 1997

Aide Memoire

1. A World Bank mission led by Ms. Mary Judd (Anthropologist, EASSD) visitedthe Republic of Philippines from October 6 - 22, 1997 to undertake the ImplementationCompletion Mission for the First Water Supply, Sewerage and Sanitation Sector Project(FW4SP). Mr. Steven Matsler (Water Supply Consultant) joined the mission in thePhilippines. The ICR Mission immediately followed the final supervision mission led byMr. Wael Zakout of the World Bank from September 29 to October 6, 1997. The missionmet with the Project Coordination Committee (PCC), and had separate meetings withrelevant agencies (DILG, DPWH, DOH, LWUA, NEDA, DBM and COA), donors(UNDP and UNICEF) and participating private sector companies (Malanday andAtlanta). The mission visited project sites in Laguna, Benguet and Davao del Surprovinces and held a series of consultative meetings in two regions: CordilleraAdministrative Regions (CAR) in northern Philippines and Region XI in the south. Themission would like to thank the following for all the cooperation, assistance andhospitality extended to the mission: PCC; staff of DOH, DILG and DPWH; beneficiaries;officials of barangays, municipalities, provinces, and regions. This Aide Memoiresummarizes the mission's findings and recommendations which were presented at awrap-up meeting on October 22, 1997. It is subject to confirmation by the managementof the World Bank.

2. The ICR mission was conducted in a participatory manner and the findings andrecommendations were a joint product of the mission and the members of the projectimplementation offices (PMOs) of the three agencies. Visits to project sites wereundertaken jointly. Consultative meetings in the regions for the various administrativelevels were facilitated by the PMOs. The information collected from these meetings werediscussed at a one day workshop in Manila on October 20 and attended by staff of thethree implementing agencies and Philippines' resident mission staff; it was included asinput into the draft findings and recommendations in the sections below. Refer toAttachment 1 for the mission agenda, list of people met and the consultative meetings.


Project Completion

3. The mission confirmed with the Government on the project implementationcompletion date of December 31, 1997. All activities after that date will not be eligiblefor funding under the Bank loan. The Government will have four months until April 30,1998 to clear all outstanding payments from the loan.

4. The following are outstanding activities yet to be completed as of October 22,1997:

Items Targets Completed OutstandingDPWHWater treatment facilities 500 370 130Repair and rehabilitation of facilities on-goingSkills Training II 7,845 6,609 1,236

DOHHousehold latrines 650,000 378,083 271,917Wastewater treatment units 100 44 56Water testing laboratories 90 63 27Well disinfections (to be completed by Nov 30) 542,000 260,000 282,000Follow-up on hygiene education material 1,000 follow up withdistribution and use in 1,000 elem. schools DECS

DILG _ _ _ _ _ _ _ _

CEP refresher/on-the-job training courses 16 16 0CEP minor repairs 1,200 0 1,200CEP operation and maintenance manual 1 0 1BWSA data 1,800 _ 0 1,800

Disbursement and Audit Reports

5. The disbursement as of September 1997 was about US$45.06 or 94% of the finalloan amount of US$47.93 million. The remainder, which is mainly for DILG's CapacityEnhancement Project, is expected to be fully drawn by the project closing date ofDecember 31, 1997. The last audit report for the project submitted to the Bank was forfiscal year 1996. The audit report for 1997 will be submitted by September 1998.

Implementation Completion Report

6. The mission discussed the draft Operational Plan and the Government'scontribution to the ICR prepared by the implementing agencies. The updated version ofthe Operational Plan is found in Attachment 2; a final version will be submitted by theend of November 1997. The Bank's ICR will be drafted by the mission members, Mary


Judd and Steven Matsler, together with the assistance of Cecilia Vales from the ResidentMission in the Philippines and Nancy Barrett from World Bank HQ. Ms. Loreta Rufo, afinancial analyst consultant from Manila, will re-estimate the economic rate of return forthe project.

ICR Mission Findings

7. Overall, the primary project objective of assisting the "Government to meet thebasic needs of the rural population through the provision of safe, adequate and easilyaccessible water supplies as well as proper sanitation" is appropriate and appears to havebeen achieved in its physical targets. Project implementation was adversely affected bylate Congressional budget approval in 1991 and the initial confusion of roles andresponsibilities related to the devolution of responsibilities to LGU in 1992. The loanwas restructured in 1993 and physical targets were revised. The summary of findings arepresented below.

a) Physical targets for water supply and sanitation facilities have been substantiallyachieved. The degree of use, operation and maintenance of the facilities have beendifficult to establish due to lack of valid and complete data at this stage. The physicaltargets were driving the project more than community demand.

b) Institutionally, the project has been partially successful: i) coordination at the nationallevel was difficult at the beginning but improved significantly towards the end of theproject and continued to be chaired by DPWH even though disbursements for it hadstopped in 1996; ii) coordination at the LGU level has been problematic due to theinitial uncertainties and confusion of responsibilities caused by devolution; iii)location of project action officers at the national level was less effective than plannedbut lack of allocation at the LGU level prevented the hiring of community organizersat that level; iii) training was satisfactory for project and government staff andBWSAs but unsatisfactory for private sector, particularly the backyard well drillers;and iv) formation of new BWSAs for Level I facilities appeared to be inappropriate.

c) Sector development objective was partially achieved: i) the preparation of provincialsector master plans were satisfactory but their use in the planning and site selectionfor the project was limited although some of these sector plans are now being used byprovinces for development planning; and ii) a national strategy and action plan forurban sewerage and sanitation was developed under LWUA and an investmentproject--Sewerage and Sanitation for Local Government Unit--generated and fundedby a Bank loan.

d) Social and environmental improvements were partially successful: i) women andchildren gained substantially from the provision of water supply and sanitationfacilities; ii) although no specific targets were set, about 50% of women were officeholders in BWSAs; iii) women usually made up more than 50% of participants atbarangay training sessions; iv) the impact on health is difficult to determine as this


will require a long term assessment; v) hygiene education materials have beendeveloped for 1,000 elementary schools but the distribution to those schools havebeen very slow and impact assessment on improved hygiene practices has yet to beundertaken; vi) the project's positive impact on poverty alleviation can only beassumed as no measuring indicators were developed at the time of project appraisal;and vii) similarly, the enviromnental impact was assumed to be positive in caseswhere potable water supply and sanitary excreta disposal facilities were provided andused accordingly.

e) Private sector development in improving local manufacturing capability was highlysuccessful: i) the Afridev deepwell handpump was modified and 1,200 units werelocally produced for the project; and ii) 650,000 pieces of plastic (polyvinylchloride)pour-flush toilet bowls were also locally produced. Quality of the above units wasverified by an independent External Quality Assurance Consultant and, later, by ajoint inspection committee composed of DILG, DBM-PS, and DOH.

f) Financial procedures and practices needed improvement: i) project account reportingwas late leading to late audits and late submission to the Bank; ii) lax internalfinancial control for budgeting, accounting, deliveries and inventories led tounaccounted for supplies and material; iii) delay in procurement of plastic toiletbowls caused a significant delay in the sanitation program; and iv) lack of pre andpost qualification of bidders resulted in some contracts being awarded to unqualifiedcontractors. A good practice by DILG was noted in its development of localguidelines (based on Bank guidelines) for provincial procurement in the CapacityEnhancement Program under the project.

8. The lessons learned from the foreign-funded projects, particularly FW4SP, haveled to significant policy changes and improved practices for both the Government and theBank, such as:

a) NEDA Board Resolution No. 4, 1994 amends NEDA Board Resolution No. 5, 1989and allows LGUs to implement all levels of water supply projects.

b) In 1995 DBM instituted the General Allotment Release Order (GARO) and theSpecial Allotment Release Order (SARO) to overcome late releases of funds.

c) Central COA undertook a study on "Transparency and Internal Controls" in1996/1997 using FW4SP as one of its case studies and has recommended significantchanges and improvements. Improved and systematic accounting and auditingpractices have been put in place for this and other projects.

d) The Philippines Resident Mission has started a series of regular disbursement andprocurement seminars for staff in project management offices.


ICR Mission Recommendations

9. The main recommendations for future water supply and sanitation projects arepresented in the light of devolution of basic services, such as water supply and sanitation,to LGUs:

a) Projects should be planned and implemented by the Local Government Units (LGU)with the National Government Agencies (NGA) providing technical assistance,supervision and monitoring, and executing agency role.

b) Provincial Sector Master Plans should be updated and promoted for use in LGUprojects. These Plans should be related to the National Master Plan to ensure that asound and common strategy is followed.

c) A careful assessment should be undertaken regarding the concept of a BarangayWaterworks and Sanitation Association (BWSA) for Level I facilities. Are theresponsibilities currently envisaged for the BWSA inappropriate for the type ofsystem mandated by the project (i.e., Level I) and is this type of a formalizedassociation more appropriate for a higher level facility?

d) At the beginning of project preparation an institutional assessment should beconducted for the capability and experience of the LGUs. Appropriate and moreintensive technical assistance should be provided to the weaker LGUs.

e) A qualified community organizer should be hired at the municipal level and paid bythe LGU. If funds are a constraint, then the project can agree to pay for the first yearand the LGU pays for the subsequent years. Training and regular refresher trainingshould be provided by the project as needed.

f) Planning, designing and implementation of sub-projects by LGUs should be based onneed and demand and in close consultation and participation with the community.

g) A supporting environment which will enable LGUs to succeed should be promoted,e.g., simplify procedures, establish mechanisms which will speed implementation,allow procurement by LGUs, develop a proper system of accounting and financialreporting.

h) Community-based projects should not include construction for the first year of theproject. Instead, they should focus on orientation and training of staff, setting upproper management systems and working with the community to plan and designtheir sub-projects.

i) Continue to support local private sector manufacturing capability and promote privatesector participation in O&M.


j) Hygiene education material can be more effectively produced and promoted at theLGU level (using the local dialect) with technical assistance from NGA.

k) It is important to promote and monitor the effective use of installed facilities.Reliable data should be collected during the monitoring. Follow-up should beprovided as needed.

1) The World Bank supervision mission should include a procurement staff from theResident Mission to undertake field reviews of accounting procedures and physicalfacilities, at least annually.

40 Appendix BBorrower


GOVERNMENT'S REVIEW AND ASSESSMENT OF THE PROJECT

ViTRODUCTION

Project Scope

1. The First Water Supply, Sewerage and Sanitation Sector Project (FW4SP), which is anoutgrowth of the Government's Accelerated Water Supply Program, is a World-Bank funded projectwhich was developed to address the identified need for improving the living conditions of its ruralpopulation through the provision of safe and adequate water supply and sanitation.

2. Area of coverage of the water supply component was in Luzon, where training, communityorganization and physical facility construction activities were carried out in 29 provinces.Approximately 14,000 Level I (point source) water supply facilities were constructed, including6,717 shallow wells, 2,664 deep wells, 660 spring developments, 370 pilot water treatment units, 188rainwater collectors, and 3,171 well rehabilitations.

3. The rural sanitation component of the project was nationwide and was therefore intended tocomplement parallel water supply projects being implemented using other funding sources, as well asproviding sanitation coverage in those areas provided with water supply facilities under the FW4SP.Major project components included implementation of 378,083 household latrines, 999 school toilets,99 public toilets, 44 pilot wastewater treatment units, 1,000 sullage removal units, 260,000 welldisinfections, 915 sanitary well protection units, and 63 water quality laboratory upgrades.

Implementation Arrangements

4. The three Philippine Government agencies with primary responsibility for implementing theproject were the Department of Public Works and Highways (DPWH), the Department of Health(DOH), and the Department of the Interior and Local Government (DILG).

5. Department of Public Works and Highways (DPWH). Under the Project, the DPWHProject Management Office for Rural Water Supply (PMO-RWS), apart from being the lead agency,was responsible for the implementation of the water supply component. The PMO-RWS was assistedin the field by its respective Regional Engineering Offices (REOs) and District Engineering Offices(DEOs).

6. Department of Health (DOH). DOH was responsible for implementing FW4SP's sanitationcomponent. To carry out such responsibility, a Project Management Office was created, which isattached to the Office of the Environmental Health Service of the Office of Public Health Services.The PMO is responsible for overall planning and management, and was assisted by Regional Officesin providing monitoring operations, including training and guidance on technical matters.


7. Department of the Interior and Local Government (DILG). The role of DILG in the Projectwas to implement the community development component, primarily the formation and training ofBarangay Waterworks and Sanitation Association (BWSA), central responsbility for which wascarried out by DILG's Water Supply and Sanitation Program Management Office (WSS-PMO), withassistance from DILG Provincial and Municipal field offices. Provincial Action Officers based at theWSS-PMO were responsible for coordination and implementation of field activities in theirrespective provinces. DILG also led and coordinated the preparation of provincial water supply,sewerage and sanitation sector plans for 29 provinces in Luzon.

8. Local Water UtilitiesAdministration (LWUA). The FW4SP loan included funding tosupport LWUA in the preparation of National Urban Sewerage and Sanitation Strategy Plan.Subsequent feasibility studies for selected localities were funded by Japanese PHRD grant facility,but administered by the World Bank under the FW4SP.

9. National Economic DevelopmentAuthority (NEDA). NEDA played a vital coordinativeand monitoring role in FW4SP, in respect of its Government mandate to ensure that priority needswere incorporated accordingly, and that development plans and investment programs wereformulated with the maximum participation of concerned groups.

Objectives

10. Basic Objectives. The main objective of the project is to support the government's policy ofproviding safe, adequate and easily accessible water supply facilities, and proper sanitation facilities,to the majority of the households in the rural areas.

I1. Institutional Objectives!Sustainabiity. (a) To promote effective community participation toachieve sustainable sector development. The Project acknowledged that sustainability of sectordevelopment is largely dependent on the extent to which communities become involved in thedevelopment process. (b) To develop organizational arrangements for improved operation andmaintenance of water supplyfacilities. Critical to the effective management of water supply is thephysical condition of the facilities. (c) To support government decentralization by providing localgovernment units with a greater role in planning, implementation and monitoring of sector activities.While the Project was implemented by national government agencies, the intention was for LGUs toassume full responsibility for managing the project at their level, including the operation andmaintenance tasks after completion of project assistance. (d) To train manpower in the planning andimplementation of water supply and sanitation systems. Training was seen as a means of developingthe skills needed to effectively achieve the project's main objective.

12. Social, Environmental, and Project Development Objectives. (a) Women in Development.The Government agreed to allow equal access to woman participants, by allowing them to playimportant and strategic roles in BWSA operation and participate in trainings for skills and knowledgeenhancement. (b) Poverty Alleviation. A primary advantage would be the time saved on fetchingwater, thus having more time for productive activities. (c) Environmental Factors. Provision ofwater supply and sanitation facilities would provide the basic needs of the communities, which wouldreduce the rate of incidence of water-borne and water related diseases which predominantly affectsrural population.

13. Private Sector Development. The production of plastic toilet bowls by a local plasticproducts manufacturer was seen as a way to benefit the private sector by reducing dependence on


imported products by the government and transferring technology to the private sector by improvingthe manufacturer's capabilities. Assistance was also to be provided in improving local handpumpmanufacturing capabilities. It was envisaged that the majority of the project wells would beconstructed by professional well drilling contractors, using an appropriate contract packagingarrangement.

IMPLEMENTATION EXPERIENCE AND RESULTS

Project Assessment

14. Objectives. The main project objective of providing safe, adequate and accessible watersupply as well as proper sanitation, is considered highly appropriate in view of the PhilippinesGovernment's emphasis on rural water supply and sanitation as contained in both the Water Supply,Sewerage and Sanitation Master Plan of the Philippines, and the Accelerated Water Supply Program.Secondary objectives (institutional, social, environmental, and private sector development) are alsoconsidered appropriate.

15. Design. Various water supply designs were used for the program and adoption of aparticular design was dependent on the actual conditions in the community. The project design wascomprehensive and ambitious in a way that it covered the development of water sector from thenational level down to barangay level. Project design was considered appropriate in that it promotedparticipation by the private sector, in both manufacturing (of toilet bowls and handpumps) andconstruction (of wells through contract packaging, and of school and public toilets), equalopportunity for women in development, and sustainability through the provision of quality assuranceand control. The implementing agencies at the national level were able to develop generalspecifications for water supply and sanitation systems, and establish a viable quality assurance andcontrol system.

16. Implementors at the provincial level including backyard well drillers and NGOs were to begiven assistance through the provision of appropriate training in the planning, design, drilling,construction, operation and maintenance procedures.

17. Implementation. Success of project implementation is measured primarily by achievementof objectives. The main project objective of supporting government policy in providing safe,adequate and accessible water supply and proper sanitation to rural communities was primarilyaffected by a substantial reduction in the total number of facility targets which was made in 1993because of initial delays in project implementation. $27 million of the original project loan amount of$85 million (which represented roughly 75% of the project cost) was cancelled in the restructuring.Later, in 1995, an additional amount of $10.07 million was cancelled from the Loan.

18. It is felt that the main objective was satisfactorily achieved despite the reduction in coverageafter the restructuring. Virtually 100 percent of the restructured water supply target and communitydevelopment target, and 58 percent of the restructured sanitation target, were achieved.

19. Institutional objectives were set in respect of: (a) promoting effective communityparticipation to achieve sustainable sector development; (b) developing organizational arrangementsfor improved operation and maintenance of water supply facilities;(c) supporting government


decentralization by providing local government units with a greater role in planning, implementationand monitoring of sector activities; and (d) training manpower in the planning and implementation ofwater supply and sanitation systems.

20. Accomplishment of items (a) and (b) above were generally felt not to be satisfactory. TheBWSA structure often proved not to be sustainable, and the effectiveness of forming what areessentially micro water utilities to provide Level I service is questionable. The project served toadequately support government decentralization (item (c)), which accomplishment was also given asignificant boost with the enactment of the Local Government Code in 1991. Item (d) wasconsidered partially satisfactory, as the project provided much useful training in the public sector butfailed to train substantial numbers of key private sector participants such as the backyard well drillerswho participated in the project.

21. Social and environmental objectives were considered in the project, including: (a) women indevelopment; (b) poverty alleviation; and (c) general environmental improvement. Although it isdifficult to quantify accomplishment of such objectives, achievement can be measured against asurrogate indicator (e.g. physical project accomplishment), and on this basis project performance isconsidered satisfactory.

22. Private sector development objectives considered the promotion of private sector activity inmanufacture, construction, and operations and maintenance. Performance in terms of manufacturewas considered highly satisfactory, as the project succeeded in promoting high quality manufactureof both deep well handpumps and plastic toilet bowls. Performance in private sector constructionwas considered unsatisfactory. The well contract packaging scheme included in the original projectdesign was never implemented, as it was considered inappropriate to field conditions, and there wereperceived cost constraints associated with the use of professional well drilling contractors. Privatesector operations and maintenance also appears to have had very limited success under the project,although some lessons in this respect are yet to be learned from the ongoing Capacity EnhancementProgram being implemented by DILG.

23. Operation/Sustainability. Sustainability is addressed at different levels. At the LGU level,sustainability of water supply and sanitation program/project implementation can only be achieved ifthere is acceptance of responsibility and adequate budgeting. This is an area where the Project wasquite unsuccessful. LGUs saw FW4SP as another grant-in-aid project for which funding wasexpected to be the sole responsibility of the national government. There was low level of acceptanceof the concept of cost-sharing, as generally the LGUs do not have provisions in their own regularbudget.

24. At the BWSA level, sustainability was limited by the extent to which BWSAs felt that theywere not treated as project partners but mere recipients of assistance. Top-down aspects of theproject design also sometimes resulted in a low sense of project ownership, with some facilities beinginappropriate to the actual needs of the community, and some beneficiaries refusing to organizethemselves. On the other hand, there were also many successes, including BWSAs whose operationshave been doing fine and whose officers have remained attuned to their responsibilities, withsignificant involvement of women in many areas. Some BWSAs have managed to upgrade theirfacilities from Level I to Level II or even Level III on their own initiative, or through resourcemobilization using LGU funds or Country Development Funds (CDF).


Constraints Encountered

25. National Budget Releases. There were long initial delays in the implementation of theproject which were associated with the delayed release of project funds, and later problems betweenthe agencies associated with lack of synchronization of funding releases. Although the formerproblem may have had something to do with the depressed state of the economy in the early stages ofthe project, the latter might have been averted through better coordination of budget requests andmore prudent use of special funds available to facilitate startup of multi-year projects (GARO and-SARO).

26. Project Coordination. Aside from the problems associated with budget releases, there wereconstraints at both the national and the local level, and between the implementing agencies as well asbetween implementing agencies and other performing supporting roles. Because of each agency'smandate to "spend or lose" its annual budget allocation, implementation of the various majorcomponents (water supply, sanitation, community development) was sometimes more like a race thana highly coordinated effort. Lack of funding at the community level resulted in inadequatecommunity organization to achieve full and effective use of local personnel trained. Problems incoordination between the DOH and the Department of Education, Culture and Sports (DECS)resulted in long delays in redistribution of project-related health and hygiene educational materialsintended for schooolchildren.

27. Effects of the Devolution. The Local Government Code (implemented in 1992) had aparticularly strong effect on the DOH, as provincial and municipal functions which had previouslybeen under its control "devolved" to their respective provinces and municipalities. The resulting lackof centralized control over key personnel such as Rural Sanitary Inspectors resulted in some reportedinstances of misuse of procured goods, and in other instances the duties of the RSIs were diverted toother functions by local politicians. The increased responsibility brought on to DILG by thedevolution required its newly designated (Manila-based) Provincial Action Officers to assume a hostof responsibilities for which they were generally inadequately prepared or funded to perform.

28. Private Sector Participation. Private sector participation in well construction was limitedunder the project to backyard well drillers who were often poorly equipped and trained to properlyconstruct project wells, which probably will affect the longevity of the facilities. Few such smallprivate well drillers received training under the project, as the Government was reluctant to extendproject funds for the training of private indviduals. With respect to well construction contractpackaging, although interest was strong on the part of the professional well drilling contractorsintended to perform this work, ultimately no wells were tendered for such construction, at least in partdue to the (unproven) perception that the wells thus constructed would be at much higher cost andwould perform no better than those constructed directly by DPWH administration.

29. Financial Procedures. The Covenenants of the Project Bank Loan were not strictly followedwith respect to timely submittal of Audit Reports, which on the part of at least one agency (DPWH)was partially the result of accounting staff being diverted to reconstruct the financial records ofanother project. Other problems seemed to be the result of inadequate training or monitoring, such asinadequate perpetual inventory systems, long initial delays in procurement of toilet bowls, and failureto properly follow Bank procurement guidelines (e.g. failure to properly postqualify a supplier ofwater supply materials).


30. Use of Government Funds for Planning Purposes. Aside from the aforementioned trainingof private individuals, the Government was unwilling to use loan funds for planning activities, suchas the required preparation of Provincial Water Supply, Sewerage and Sanitation Sector Plans.Instead, grant funding was required to be sourced out for this purpose, which resulted in considerabledelay in project implementation and probably also lessened the plans' intended use as a tool in settingFW4SP project targets.

Borrower's Performance

31. The respective Project Management Offices of the three implementing agencies weremandated to implement the water supply and sanitation improvements. Activities were to be jointlyadministered through a Project Coordinating Committee, although many of the senior members of theCommittee did not remain in place for the duration of the project and there were substantial problemsassociated with the level of coordination required, in particular lack of synchronization in theschedules for implementation of community development activities and water supply facilityconstruction, and mismatches between BWSA formation targets and corresponding water supplyfacility construction targets. Considering the degree of coordination required, implementation wasgenerally considered satisfactory. The agencies completed the majority of the facilities targeted, andwere very successful in promoting the private sector manufacture of water supply- and sanitation-related goods.

Bank Performance

32. Bank performance suffered slightly from a lack of continuity of task management over thecourse of the project, but is generally considered satisfactory. In the future, it would be helpful toprovide more intensive assistance in the area of procurement, as Bank staff have strong expertise inthis area and such intervention might have helped to correct four major problems in theimplementation of the project which were noted earlier (late submission of audit reports, delayedprocurement of toilet bowls, failure to properly postqualify a supplier, and failure to implementcontract packaging of wells constructed).

Summary of Lessons Learned and Recommendations for Future Projects

33. Interagency Coordination. Strengthening of coordination among implementation agenciesfrom the central down to the local level is key to ensuring efficient delivery of support to LGUs. Thefollowing specific activities are recommended:

a) Promote early identification of agencies responsible for meeting the preconditionalities of theloan, to achieve the proper level of coordination and ensure timely compliance to thepreconditions.

b) Solicit direct assistance of senior government officials as required in coordinating construction,certification, operation and maintenance of facilities.

c) Synchronize releases of funds to each implementing agency. For future projects of the sameaspect, it is suggested that the Department of Budget Management (DBM) should be on board asearly as the planning stage, and the Project Coordinating Committee should include the DBM asone of its regularly attending members.


d) Maintain close liaison with the Bank staff for effective and efficient implementation.

e) Install a data bank for computer inputs at the LGU and provincial levels which is jointlyaccessible to the national government agencies.

34. Effective Community Participation. Community and LGU participation in project planningand implementation is crucial to project success. Planning should be a two-way process - bottom-up,then top to bottom. The following aspects require careful attention:

a) Funding for community organization at the municipal level should be shared by the Project (1 styear) and the LGUs (subsequent years).

b) Intensified social preparation and sustained public dissemination from the project design stage isvery important to attain cooperation, commitment and acceptance by the community. Emphasison intensified health education regarding proper personal hygiene and appropriate sanitarypractices should be provided.

c) Training/Orientation of the LGUs on the Sanitation Component should be emphasized, toimprove their awareness and ability to provide assistance to RSIs. Assistance from local NGOs,Barangay Health Workers and other civic organizations must be effectively solicited in thedelivery of the basic services.

d) Intensive involvement of women in water supply and sanitation management for improvedutilization and sustainability of physical facilities should be promoted to enhance 0 & M, andimprove family hygiene practices.

e) Technologies to be used shall fit the local needs, resources and demand by the rural communities.

f) Training should only be provided to those who meet, specific, clearly predefined requirementsfor participation.

g) Other mechanisms besides BWSAs (such as pre-existing community organizations) may be moreappropriate for providing Level I water supply services.

h) Educational materials should be produced at the LGU level and in the local dialect.

i) Regular monitoring on the functionality, use, potability, and 0 & M of completed water supplyand sanitation facilities should be undertaken by the LGUs.

35. Adequate Advance Preparation and Proper Timing. Community consultation shall beundertaken from project identification. Social preparation of the communities and planning activitiesshall precede any project implementation activities to be carried out. In particular, the following areimportant:

a) Orientation on the proposed sector project to be given to the local officials, in order to informthem of the project components and benefits, and to get their commitment and acceptance.

b) Site selection and spot mapping with the community.


c) Preparation of a comprehensive project implementation plan, together with the community,during the initial year to facilitate proper monitoring and reporting, prior to the start ofconstruction.

d) Organization of BWSAs, activation of existing ones prior to project implementation, and tappingof existing organizations.

e) Performing project launching workshops so as to get all of the beneficiaries involved, and to bereperformed in instances when there is a substantial mid-project deviation in scope or design.

36. Financial Matters. The government should live up to its commitment to provide budgetfunds and GOP counterpart funds. The GARO and SARO (one time allotment for one yearexpenditure) has been provided for this purpose. Agency financial procedures should bestrengthened, including the following:

a) Promotion of cost recovery schemes at the outset of the planning stage to ensure sustainability.

b) Strengthening of the internal control system, particularly on matters pertaining to procurement.Additional training should be provided, especially at the lower levels.

c) Defining the tasks of Accountants to update, maintain and accomplish properly the books ofaccounts and financial reports, to ensure reliability and accuracy of financial information.

d) Accounting staff should concentrate on the annual financial reporting of the project at hand;projects should acquire dedicated accounting staff.

e) An assessment of the financial management capability of the Project Office should be done at thepreparation stage of the project.

f) A computerized financial management system should be established.

g) Lending institution staff should perform a review of statements of expenditure at least annuallyfor timely discovery of discrepancies.

37. Private Sector Development. Continue promoting the use of modified Afridev handpumpsfor deeper well settings:

a) Continue promoting the use of plastic toilet bowls.

b) Promote contract packaging of wells for LGUs where feasible.

c) Promote private sector participation as an 0 & M strategy.

38. Facility Design Aspects:

a) Promote child-friendly facility designs.

b) Provide more emphasis on drainage of water supply facilities.

c) Provide appropriate sanitary pit designs to suit varied conditions, e.g. sandy soils.


Summary Assessment of Project

39. The lessons derived from this Project served as valuable input to the recent reforms in thesector. Coordination can only be effectively achieved if effective community participation isengendered. This does not mean of course that there is no more room for national governmentagencies (NGAs) to take part in the entire development process; there are capacity constraints andlimitations where NGAs' interventions are crucial, and the level of preparedness of LGUs to assumean increased role in the Sector varies substantially from one to another. The task of helping the lessprepared is still part of NGA responsibility.

40. Given the policy environment within which the Project was conceived and developed, theobjectives set were reasonable and were consistent with the design of the project, and theachievement of these objectives is considered satisfactory.

49 Appendix CConsultant


FINAL REPORT SUMMARY BY CONSULTANT

General Scope of Services

1. Under the Project, Engineering-Science, Inc. (ES), in association with Nippon JogesuidoSekkei Co. Ltd. (NJS) and Basic Technology and Management Corporation (BASICTEAM) providedProject Implementation Consultancy (PIC) services. The main objective of the consultancy serviceswas to contribute to the successful implementation of the project, including the following broad areasof assistance: administrative and technical assistance; planning; monitoring; reporting; and training.

Performance in Specific Areas

2. Administration and TechnicalAssistance. Such assistance was provided throughpreparation and attendance of all meetings of the Project Coordinating Committee (PCC), and bycontinuously posting key personnel in the central offices of the three project implementing agencies.Administratively, the consultants' presence and impartiality generally served to facilitate interagencycoordination and cooperation, despite such difficulties as might be expected given the (three-agency)nature of the project design. Technically, the approach taken served to enhance agency achievementand technology transfer in project implementation planning for each individual agency, indevelopment and modification of detailed designs and specifications (water supply and sanitationfacilities), and in prequalification and tendering assistance (materials, equipment, civil works, otherconsultants). Specific problems which occurred and would probably have benefited from closerattention of the consultants included delays in successful implementation of contracts for manufactureof plastic toilet bowls, at least one observed breach of Bank procurement policy, and slow agencycompliance with Bank financial reporting and audit requirements.

3. Planning. General planning assistance provided included review of the initial provincialmaster plans prepared and incorporation of the pertinent information from them (e.g., rural water andsanitation facility requirements, unserved population) into detailed investment programs (coveringcontracting arrangements, training and community development activities, implementation schedules,and monitoring indicators). However, delays in locating sources of grant funding for subsequentbatches of Master Plan preparation eventually resulted in the FW4SP investment programmingactivity overtaking the broader master planning activity.

4. An updated Water Supply, Sewerage and Sanitation Sector Master Plan will be preparedunder ADB grant funding starting in 1998, with the National Economic Development Authority(NEDA) as the Executing Agency. The role of the consultants under FW4SP was to provide inputsfor such a plan, which was accomplished in a series of meetings between NEDA and the consultants,and by closely involving NEDA in the activities of the PCC in the early and middle stages of theproject, where they were kept informed of the FW4SP's successes and travails. Such experienceundoubtedly helped to shape NEDA's philosophy for implementation of future sector projects, whichnow appears to be more closely focused on community-based approaches to rural water supply andsanitation.


5. Monitoring and Evaluation. Consultant field teams were frequently employed to conductindependent checks of implementation progress, and to monitor and evaluate construction,installation, operation and maintenance, with aspects of particular relevance from such activitiesbeing recorded in the respective quarterly reports. Monitoring indicators on physical projectaccomplishment were also maintained by the consultants and input into a computer data base (andreported in the consultants' quarterly reports) for the duration of the project. A broader range ofindicators intended to quantify correlations between physical project accomplishment and lessobvious aspects of project accomplishment were also developed early in the project, but lesseffectively maintained throughout, as the personnel responsible for their development left the projectin the early stages and were apparently succeeded by less skilled or experienced personnel. In thelatter stages of the project, the consultant assisted the three implementing agencies to organizeadditional surveys and conduct data analysis, which helped to mitigate information gaps which mightotherwise have occurred.

6. A baseline survey suitable for conducting an environmental health impact assessment wasalso conducted by the consultants at about the time that the project's household latrine subcomponentwas just starting to show meaningful progress, but to date follow-up assessments have been limited topresumed correlations between such impacts and measured physical accomplishment. A detailedfollow-up survey conducted during the project's operations phase (preferably some months aftercompletion of installation of the household latrines) might provide a more accurate correlation.

7. Reporting. Compliance with reporting requirements is considered generally successful.Monthly and quarterly reports were diligently prepared by the consultants, incorporating the resultsof the ongoing monitoring efforts in relation to the planned program of work, with data obtained fromeach of the implementing agencies and from consultant field teams. Typically, these routine reportsaddressed summaries of progress and project achievements, planning and scheduling of activities,particular difficulties encountered and plans for resolving them, field activities undertaken, andaccomplishment of monitoring indicators. A variety of other reports were also prepared inaccordance with both explicit requirements of the Terms of Reference, and with respect to a varietyof both routine and special activities conducted by the consultants (e.g., project data base,prequalification and tender evaluation, environmental health impact baseline survey, evaluation ofspecial items of materials and equipment).

8. Training and Technical Assistance. The consultants participated extensively in trainingactivities throughout the project implementation period. Training manuals and courses developedand conducted directly by the consultants covered all aspects of water supply and sanitation facilitydesign and construction; much training assistance was also given during Government-sponsoredtraining events in community development. The consultants also assisted in the development ofhealth and hygiene educational materials, and in conducting skills training in the operation andmaintenance of Level I water supply facilities. Some training activities in the foregoing topics werealso conducted for private sector participants, but were severely limited by availability of funding andare not considered particularly successful.

Summary Assessment

9. The consultant's main objective of contributing to the successful implementation of theProject was achieved. Contributions made in the planning, implementation and administration ofproject activities assisted to improve both the timeliness and quality of project implementation.Capabilities of the implementing agencies were enhanced in several areas as a direct result of the


consultant's activities, particularly in the design and construction of water supply facilities. Healthand hygiene educational materials prepared with consultant assistance are finding use throughout theproject area. Attempts to broaden private sector and local government capabilities have also been atleast partly successful. The professional observations of the consultant gained over the entire projectimplementation period have helped both the implementing agencies and World Bank to perform amore comprehensive and impartial evaluation of the project, and to develop meaningfulrecommendations for improving the performance of future sector projects.

10. The approach taken by the consultants was not without a few problems worth noting: (a)Inputs of some of the expatriate technical experts employed, particularly with respect to computerapplications and financial systems, were expended early in the project, on the (overly optimistic)assumption that the necessary technology transfer would have been completed by then. It wouldhave been better to have provided for intermittent inputs from such personnel through a considerablylonger period. (b) Three team leaders were employed over the duration of the project, which likelyadversely affected continuity of liaison with the Government, and continuity of the consultants'technical activities generally. (c) Team composition strongly emphasized expatriate personnel withstrong technical skills (as opposed to community development expertise), and local personnel withextensive previous government agency service (as opposed to international consulting experience),which may have lessened the level of community development assistance, and some other aspects oftechnology transfer.

IBRD 27553

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CORDILLERA ADMINISTRATIVE 42 Ne~~~~~~~~~~~~~~~~~~~ras Occidental~~~~~12

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